Forrester Company is considering buying new equipment that would increase monthly fixed costs from $126,000 to $162,000 and would decrease the current variable costs of $70 by $10 per unit. The selling price of $100 is not expected to change. Forrester's current break-even sales are $420,000 and current break-even units are 4,200. If Forrester purchases this new equipment, the revised break-even point in units would:

150 units decrease

Explanation:

The computation of the revised break even point in units is shown below:

As we know that

Break even point in units is

= Fixed costs ÷ (Selling price - variable cost)

= $162,000 ÷  ($100 - $60)

= 4,050

And, the Current Break even point is 4,200

So, BEP will reduce by

= 4,200 - 4,050

= 150 units

whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

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