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Audio cables, INC. is currently manufacturing an adapter that has a variable cost of $.50 per unit and a selling price of $1.00 per unit. Fixed cost are $14,000. Current sales volume is 30,000 units. The firm can substantially improve the product quality by adding a new piece of equipment at an additional fixed cost of $6,000. Variable cost would increase to $.60, but sales volume should jump to 50,000 units due ti a higher-quality product. Should audio cables buy the new equipment?
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