With the change in production johns camera will lower its

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Reference no: EM13394937

John's Camera is currently selling cameras at a price of $100. The cameras have a variable cost of $75 per camera and John's Camera has a total fixed cost of $100,000. John's Camera is currently selling 5,000 units of cameras. John's Camera is considering changing its production process. With the change in production, John's Camera will lower its fixed to $80,000 but raise its variable costs to $90 per unit. Should John's Camera go forward with the change in production process?

A. Yes, because the new production process lowers fixed costs by $20,000

B. Yes, because the new production process raises the contribution margin

C. No, because the new production process leads to a decline in profits by $55,000.

D. No, because the new production process raises the variable costs by $15 per unit.

Reference no: EM13394937

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