An electronics firm is currently manufacturing an item that has a variable cost of $0.50 per unit and a selling price of $1.10 per unit. Fixed costs are $14,000. Current volume is 35,000 units. The firm can substantially improve the product quality by adding a new piece of equipment at an additional fixed cost of$6,000. Variable cost would increase to $0.60?, but volume should jump to 50,000 units due to a? higher-quality product.
Based on the given? information, the decision should be to
a) For Smithson? Cutting, the? break-even point in units? = 5,500 units ?
?b) For Smithson? Cutting, the? break-even point in dollars ?