Q. Carter Manufacturing is currently producing a tape holder which has a variable cost of $0.75 per unit also a selling price of $2.00 per unit. Fixed costs are $20,000. Current volume is 40,000 units. The industry can produce a better product by adding a new piece of equipment to the process line. This equipment represents an increase of $5,000 in fixed cost. The variable cost would decrease $0.25 per unit. Volume for the new also improved product should rise to 50,000 units.

a). Should the organization invest in the new equipment?

b). At illustrate what volume does the equipment choice change?

c). At a volume of 15,000 units, which process should be used?