Techno Corporation is currently manufacturing an item at variable costs of $5 per unit. Annual fixed costs of manufacturing this item are $140,000. The current selling price of the item is $10 per unit, and the annual sales volume is 30,000 units. Alternatively, Techno could increase the selling price to $11 per unit. However, the annual sales volume would be limited to 45,000 units. Should Techno buy the new equipment and raise the price of the item? Why or why not
Techno Corporation is currently manufacturing an item at variable costs of $5 per unit. Annual fixed costs of manufacturing this item are $140,000. The current selling price of the item is $10 per unit, and the annual sales volume is 30,000 units. Alternatively, Techno could increase the selling price to $11 per unit. However, the annual sales volume would be limited to 45,000 units. Should Techno buy the new equipment and raise the price of the item? Why or why not
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 3CMA: Aril Industries is a multiproduct company that currently manufactures 30,000 units of Part 730 each...
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Techno Corporation is currently manufacturing an item at variable costs of $5 per unit. Annual fixed costs of manufacturing this item are $140,000. The current selling price of the item is $10 per unit, and the annual sales volume is 30,000 units.
Alternatively, Techno could increase the selling price to $11 per unit. However, the annual sales volume would be limited to 45,000 units. Should Techno buy the new equipment and raise the price of the item? Why or why not?
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