Benny Ltd sells bubble tea for $0.40 per packet to retailers. The following revenues and costs for one month.

Sales $ 180,000

Less; Variable manufacturing Costs $117,000

Fixed manufacturing overheads 25,000

Variable selling and administrative 9,000

Fixed selling and administrative 11,000 162,000

Net Profit $18,000

Required:

1. Compute the companys monthly break-even point in units and margin of safety.
2. The company is discussing the installation of a new machine to pack the drinks. The new machine would slash variable manufacturing costs per packet by $0.04, but it would cause fixed manufacturing costs to double in amount per month. If the new machine is installed, how many units would the company have to sell to maintain its current profits of $18,000?
3. Should the company install the new machine if sales remain at the current level? Explain.