### What effect on the break-even point would this change have

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Question - A company is currently producing and selling 40,000 units of its product. The product sells for \$10, has variable production costs of \$6 per unit, and total fixed costs of \$100,000. An industrial engineer has proposed that the company substitute capital for labor by installing new automated production equipment. The proposed change will increase total fixed costs by \$50,000 and, at the same time, will reduce unit variable production cost by \$2. The selling price will remain the same. What effect on the break-even point would this change have? Do you recommend that the change be made? Why or why not?

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