Question: Flow Industries is planning on purchasing a new piece of
Flow Industries is planning on purchasing a new piece of equipment that will increase the quality of its production. It hopes the increased quality will generate more sales. The company’s contribution margin ratio is 50%, and its current breakeven point is $ 500,000 in sales revenue. If Flow Industries’ fixed expenses increase by $ 50,000 due to the equipment, what will its new breakeven point be (in sales revenue)?
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