Suppose Philip Neilson (from problem 8) decides to expand his business. His new ﬁxed expenses will be $20,000, but the average cost for a ﬁreworks assortment will fall to just $5 due to Philip’s higher purchase volumes.
a. What is the new break-even point?
b. At what volume level is Philip indifferent to the two capacity alternatives outlined in problems 8 and 9?