Question: Handers Manufacturing le considering purchasing a new machine that wil reduce variable costs per part produced by $0.15. The machine will increase fixed costs by
Handers Manufacturing le considering purchasing a new machine that wil reduce variable costs per part produced by $0.15. The machine will increase fixed costs by $17,400 per year. The information they will use to consider these change is shown here A. What will the mpact be on the break even point ir Flanders purchases the new machinery Round per unit cost answers to two decimal places Current New Machine Units sold 212,000 Sales Price Per Unit 52.15 Variable Cost Per Unit 51.70 Contribution Margin Per Unit $0.45 Pxed Costs $63,000 Break-Even (in units) 140,000 Break Even (in dollars) $301,000 B. What will the impact be on net operating income if Flanders purchase new machinery Current New Machine Sales $455,800 Variable costs 560,400 Contribution Margin 595,400 Fixed Costs 63,000 Net Income (1) $32,400 C. What would your recommendation be to Flanders regarding this purchase a. The new equipment will increase ived costs substantial 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 Neut
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