Question about purchase of new equipmentaudiocables inc is, Ask an Expert

Management Studies

Question about Purchase of new equipment

AudioCables, Inc. is currently manufacturing an adapter that has a variable cost of $.50 per unit and selling price of $1.00 per unit. Fixed cost are $14,000. Current sales volume is 30,000 units.. The firm can substantially improve the product quality by adding a new piece of equipment at an additional fixed cost of $6000. Variable costs would increase to $.60 but sales volume should jump to 50,000 units due to higher quality product. Should Audio Cables buy the new equipment?

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Business Management, Management Studies

Category:- Business Management
Reference No.:- M9739381

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