Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.1
Posted: Sun Apr 17, 2022 6:59 pm
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 $16,500 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 if Flanders purchases the new
machinery? Round per unit cost answers to two decimal
places.
B. What will the impact be on net
operating income if Flanders purchases the new machinery?
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 lower 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.
a.b.c.d.
that will reduce variable costs per part produced by $0.15. The
machine will increase fixed costs by $16,500 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 if Flanders purchases the new
machinery? Round per unit cost answers to two decimal
places.
B. What will the impact be on net
operating income if Flanders purchases the new machinery?
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 lower 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.
a.b.c.d.