Techno Corporation is currently manufacturing an item at variable costs of $4 per unit. Annual fixed costs of manufacturing this item are $140,000. The current selling price of the item is $11 per unit, and the annual sales volume is 35,000 units. a. Techno can substantially improve the item’s quality by installing new equipment at additional annual fixed costs of $55,000. Variable costs per unit would increase by $1, but, as more of the better-quality product could be sold, the annual volume would increase to 55,000 units. Should Techno buy the new equipment and maintain the current price of the item? Why or why not? from $105000 to $ 135000. (Enter your responses as Yes , because the profit increases integers.) b. Alternatively, Techno could increase the selling price to $13 per unit. However, the annual sales volume would be limited to 40,000 units. Should Techno buy the new equipment and raise the price of the item? Why or why not? ▼1, because the profit w/ from $□ to $□ (Enter your responses as integers.)

Current:
Variable cost VC = $4 per unit
Fixed cost FC= 140000
Selling price P = $11
Sales volume Q = 35000
Profit = (P-VC) Q – FC
Profit = (11-4)35000 – 140000 = $1, 05,000
a)
Variable cost VC = $5 per unit
Fixed cost FC= =140000+55000 = 195000
Selling price P = $11
Sales volume Q = 55000
Profit = (11-5)55000 – 195000 = 1, 35000
Yes Techno should buy new equipment as the profit increases from 105000 to 135000
b)
Variable cost VC = $5 per unit
Fixed cost FC= =140000+55000 = 195000
Selling price P = $13
Sales volume Q = 40000
Profit = (13-5)40000 – 195000 =320000 – 195000 = 125000
No because the profit decreases from 135000 to 125000
 
“Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!”

What Students Are Saying About Us

.......... Customer ID: 12*** | Rating: ⭐⭐⭐⭐⭐
"Honestly, I was afraid to send my paper to you, but splendidwritings.com proved they are a trustworthy service. My essay was done in less than a day, and I received a brilliant piece. I didn’t even believe it was my essay at first 🙂 Great job, thank you!"

.......... Customer ID: 14***| Rating: ⭐⭐⭐⭐⭐
"The company has some nice prices and good content. I ordered a term paper here and got a very good one. I'll keep ordering from this website."

"Order a Custom Paper on Similar Assignment! No Plagiarism! Enjoy 20% Discount"