David from Problem 16 is now concerned as the market demand does not look very promising, and he may not be able to sell more than the breakeven volume. Therefore, instead of buying brand new equipment, he plans on buying used equipment for $20,000 to reduce his fixed cost. Since the equipment is secondhand, it forces his employees to work at a slower pace, thus increasing the variable cost per toy to $20. Will these changes reduce his breakeven point?

Data From Problem 16

David wants to be an entrepreneur after his graduation. He is interested in toy manufacturing. After conducting market research, he estimates that his initial investment to buy brand-new toy production equipment will be $30,000; whereas for each toy, he must spend $15 toward toy materials, labor, packaging, and shipping. He plans to produce as many toys as the market demands. He expects that he can sell each toy for $30.