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(solution) An electronic firm is currently manufacturing an item that has a variable cost of $0.6 per unit and.


An electronic firm is currently manufacturing an item that has a variable cost of $0.6 per unit and a selling price of $1.10 per unit. Fixed costs are $ 15,500. Current volume is 32,000 units. The firm can substantially improve the product quality by adding a new piece of equipment at an additional fixed cost of $ 8,000. Variable cost would increase to $0.70, but volume should jump to 50,000 units due to a higher quality product. (a) Should the company buy the new equipment? (b) Compute the profit with the current equipment and the expected profit with the new equipment. Additional Requirements Level of Detail: Show all work

 

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Sep 13, 2020

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