Felix Company Sells a Single Product at a Price of $57

question 21

Essay

Felix Company sells a single product at a price of $57 per unit.Variable costs per unit are $35 and total fixed costs are $719,400.Felix is considering the purchase of a new piece of equipment that would increase the fixed costs to $1,023,700,but decrease the variable costs per unit to $28.
Required:
a.If Felix Company expects to sell 40,000 units next year,should they purchase this new equipment?
b.What would Felix's volume have to be to change your recommendation in A above?

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Definitions:

Ritualistic Behavior

Repetitive actions performed in a prescribed manner, often part of religious, cultural, or social practices, imbued with symbolic meaning.

Impulse

A sudden, involuntary urge to do something.

Delusion

A false belief held with strong conviction despite superior evidence to the contrary, often a symptom of psychiatric disorders.

Panic Attacks

Sudden episodes of intense fear or panic, often characterized by trembling, dizziness, and difficulty breathing.