Andy Mendoza in Problem 7 is concerned that the demand for his dolls will not exceed the break-even point. He believes he can reduce his initial investment by purchasing used sewing machines and fewer machines. This will reduce his initial investment from $25,000 to $17,000.
However, it will also require his employees to work more slowly and perform more operations by hand, thus increasing variable cost from $10 to $14 per doll. Will these changes reduce his break-even point?