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Should they purchase this new equipment

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Question - The Company sells a single product at a price of $69 per unit. Variable costs per unit are $42 and total fixed costs are $1,455,000. ABC is considering the purchase of a new piece of equipment that would increase the fixed costs to $1,785,000 but decrease the variable costs per unit to $38.00.

Required - If The Company expects to sell 105,000 units next year, should they purchase this new equipment? Justify your answer.

Reference no: EM132535999

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