Premier Products Inc. is considering replacing its existing machine with a new and faster machine that will produce a more reliable product and will turn around customer orders in a shorter period. This change is expected to increase the sales price and fixed costs but not the variable costs: 

Required 

(a) Determine the breakeven point in units for the two machines. 

(b) Determine the sales level in units at which the use of the new machine will achieve a 10% target profit-to-sales ratio. 

(c) Determine the sales level in units at which profits will be the same for either the old or the new machine. 

(d) Which machine represents a lower risk of incurring a loss? Explain why. 

(e) Determine the sales level in units at which the profit-to-sales ratio will be equal with either machine.

COST ITEM Monthly fixed costs.... Variable cost per unit Sales price per unit... OLD MACHINE NEW MACHINE $120,000 14 18 $240,000 14 20