Kohler Corporation Sells Its Product for $40

Multiple Choice

Kohler Corporation sells its product for $40. The variable costs are $18 per unit. Fixed costs are $16,000. The company is considering the purchase of an automated machine that will result in a $2 reduction in unit variable costs and an increase of $5,000 in fixed costs. Which of the following is true about the break-even point in units?

A) It will remain unchanged.
B) It will decrease.
C) It will increase.
D) It cannot be determined from the information provided.