As a production manager, you are faced with a decision between two options for new production equipment. Machine A represents a significant increase in fixed costs but is expected to generate higher sales volume at the current price. On the other hand, Machine B would only slightly increase fixed costs but promises substantial savings on variable costs per unit. No additional sales are anticipated if Machine B is selected.

Questions:

Evaluate the relative merits of both machines.

How would you analyze which machine is the better investment for the company regarding net operating income?

What approach would you take to determine the break$-$even point for each machine?