Siche Company Manufactures Cell Phone Covers That Sell for $10

Siche Company manufactures cell phone covers that sell for $10 each. Fixed costs are $48,000 and variable costs are $7.20 per unit. Siche can buy a newer molding press that will increase fixed costs by $16,000 per year, but variable costs will be decreased by $.80 per unit. What effect will the purchase of the new press have on the breakeven point in units of Siche Company?

A) 635-unit increase.
B) 1,000-unit increase.
C) 1,681-unit decrease.
D) The purchase of the machine will not change the breakeven point.

Correct Answer:

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