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Calculating units to be economically indifferent .
Question 6 options:
Pure Water Products produces a water filter that attaches to the faucet and cleans all water that Passes through the faucet. Revenue and cost information for the water filter appears below: Selling price... $80 per unit Variable costs... $20 per unit Fixed costs (in total)... $840,000 Pure Water is considering buying new production equipment. The new equipment will increase fixed costs by $80,000 per year and will decrease the variable cost of the water filter by $4 per unit. Calculate the number of units of the water filter that Pure Water Products must sell in order to be economically indifferent between buying the new production equipment and continuing to use their old equipment. __________________________________________________ ______________________________________ I don't understand what it is exactly that I'm supposed to be calculating. Contribution margin? Can some please explain what I'm supposed to figure out exactly? |
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