The electronics firm in Problem 20 is now considering purchasing the new equipment and increasing the selling price of its product to $1.20 per unit. Even with the price increase, the new volume is expected to be 50,000 units. Under these circumstances, should the company purchase the new equipment and increase the selling price?

this is problem 20! An electronics firm is currently manufacturing an item that has a variable cost of $0.60 per unit and selling price of $1.10 per unit. Fixed costs are $15,500. Current volume is 32,000 units. The firm can substantially improve the product quality by adding a new piece of equipment at an additional fixed cost of $8,000. Variable cost would increase to $0.70, but volume is expected to jump to 50,000 units due to the higher quality of the product. (a) Should the company buy the new equipment? (b) Compute the profit with the current equipment and the expected profit with the new equipment.