Problem: By investing more capital for equipment, the business would be able to reduce selling costs to $0.40 per unit, with a 15% increase in Other Fixed Costs.
i. Calculate the annual new breakeven point in dollar sales if the investment is made. New selling Price = $4.00 Other fixed cost increases by 15% x $100,000 = 15,000 Other fixed costs = 115,000 New Annual breakeven point = Annual Fixed costs/Contribution margin per unit = (60,000 160,000 115,000)/(6 - 3.9- 0.4) = 335,000 x 1.7√ = 569,500 burgers Accuracy 335,000 x 1.7 = 569,500 - why is this marked as not accurate?
ii. Advise Mrs Mac whether she should invest the capital or not, providing the reason for your conclusion. Partly answered, sub mit dollar calculations Investing capital into a business is a significant decision that should be based on a thorough analysis of various factors. In this case, Mrs Mac should invest the capital because the new break-even point is positive. The break-even point is where total revenue (sales) equals total costs (both fixed and variable). A positive break-even point means that the projected sales revenue is greater than the total costs, indicating that the decision to invest