Wardley Corporation Sells Its Product for $40

question 96

Multiple Choice

Wardley Corporation sells its product for $40.The variable costs are $18 per unit.Fixed costs are $16,000.The company is considering the purchase of an automated machine that will result in a $2 reduction in unit variable costs and an increase of $5,000 in fixed costs.Which of the following is true about the break-even point in units?

• A)It will remain unchanged.
• B)It will decrease.
• C)It will increase.
• D)It cannot be determined from the information provided.

---

Definitions:

Financial Advantage

The benefit obtained from making certain financial decisions or investments, often resulting in savings, earnings, or a stronger financial position.

Intermediate Products

Goods that are in a middle stage of production, not yet final products, but also not raw materials; used as input in the production of other goods.

Processed Further

The decision or action to continue the transformation of a product beyond the initial production phase to add value.

Intermediate Products

Goods that are produced in one manufacturing process and then used as inputs in another process to create final products.