Question

Jack’s Grocery is manufacturing a ‘store brand’ item that has a variable cost of $0.75 per unit and a selling price of $1.25 per unit. Fixed costs are $12,000. Current volume is 50,000 units. The firm can substantially improve product quality by adding a new piece of equipment at an additional fixed cost of $5,000. Variable cost would increase to $1.00 but their volume should increase to 70,000 units due to the higher quality product. Should the company buy the new equipment?

Answer 1

Answer:

Fixed costs are $12,000. Current volume is 50,000 units.The grocery can substantially improve the product quality by adding ...

Explanation:

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