C

Ch$6$A$\_$BreakEvenAnalysis$\_$Template.xIsx

BEP$\_$Single Option

BEP$\_$Multiple Options

Break Even Point for Single Alternative

FixedCost

Variable cost per unit Revenue per unit QBEP $=$h$6$A$\_$BreakEvenAnalysis$\_$Template.xIsx

BEP$\_$Single Option

BEP$\_$Multiple Options

Break Even Point for Single Alternative

FixedCost

Variable cost per unit Revenue per unit QBEP $=$

AudioCables, Inc., is currently manufacturing an adapter that has a variable cost of $$0\mathrm{.}50$ per unit and a selling price of $$1\mathrm{.}00$ per unit. Fixed costs are $$14,000.$ Current sales volume is $30,000$ units. The firm can substantially improve the product quality by adding a new piece of equipment at an additional fixed cost of $$6,000.$ Variable costs would decrease to $$0\mathrm{.}40,$ but sales volume should jump to $50,000$ units due to a higher$-$quality product. Should AudioCables buy the new equipment? Justify your answer using your analysis.

Use the spreadsheet titled Ch$.6$ Breakeven Problems to solve this problem.