Break-Even Analysis-additional euipment purchase

If the Jay Linoleum Company has fixed costs of $70,000, and its product
currently sells for $4 per unit with the variable costs per unit at
$2.60. Mr. Thomas, the head of

Manufacturing, proposes to buy new equipment that will cost $300,000 and

up fixed costs to $105,000. With the price remaining at $4 per unit,
will the increased

automation reduce variable costs per unit to $2.25?

Question: Will the break-even point go up or down?

Compute the necessary numbers.


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