A Manufacturer Contemplates a Change in Technology That Would Reduce

question 70

Multiple Choice

A manufacturer contemplates a change in technology that would reduce fixed costs from $800,000 to $600,000, and reduce depreciation expense from $125,000 to $100,000.However, the ratio of variable costs to sales will increase from 68 percent to 80 percent.What will happen to break-even level of revenues?

• A)a reduction to the level of $875,000
• B)a reduction to the level of $2,890,625
• C)an increase to the level of $3,500,000
• D)an increase to the level of $3,625,000