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The statement of income for Dimmell Co. presented below represents the operating results for the fiscal year just ended. Dimmell had sales of 1,800tons of

The statement of income for Dimmell Co. presented below represents the operating results for the fiscal year just ended. Dimmell had sales of 1,800tons of product during the current year. The manufacturing capacity of Dimmell's facilities is 3,000tons of product. Dimmell Co.

Statement of Income

For the Year Ended December 31, Year 2

Sales

$900,000

Variable costs:

Manufacturing

$315,000

Selling costs

180,000

(495,000)

Contribution margin

$405,000

Fixed costs:

Manufacturing

$90,000

Selling

112,500

Administration

45,000

(247,500)

Operating income

$157,500

Income taxes (40%)

(63,000)

Net income

$94,500

Dimmell is considering replacing a highly labor intensive process with an automatic machine. This would result in an increase of $58,500 annually in manufacturing fixed costs. The variable manufacturing costs would decrease $25 per ton. The new breakeven volume in tons would be

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