Question: Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.15. The machine will increase fixed costs by

Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.15. The machine will increase fixed costs by $19,500 per year. The information they will use to consider these changes is shown here. A. What will the impact be on the break-even point f Flanders purchases the new machinery? Round per unit cost answers to two decimal places. New Machine Current Units Sold 220,000 Sales Price Per Unit $2.10 Variable Cost Per Unit $1.75 Contribution Margin Per Unit 50.35 Fixed Costs $57,500 Break-Even (in units) 150,000 Break-Even (in dollars) $315,000 B. What will the impact be on net operating income if Flanders purchases the new machinery? Current New Machine Sales $462.000 Variable costs 385,000 Contribution Margin 577,000 Fixed Costs 52,500 Net Income (Loss) $24,500 C. What would your recommendation be to Flanders regarding this purchase? a. The new equipment will increase fixed costs substantially but net income will still increase due to the increased variable cost savings, which leads to a higher contribution margin. The machine should be purchased. b. The new equipment will decrease fixed costs substantially and net income will increase due to the increased variable cost savings, which leads to a higher contribution margin. The machine should be purchased. c. The new equipment will increase fixed costs substantially and net income will decrease due to the decreased variable cost savings, which leads to a tower contribution margin. The machine should not be purchased. d. The new equipment will decrease fixed costs substantially but net Income will still decrease due to the decreased variable cost savings, which leads to a lower contribution margin. The machine should not be purchased
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