A Manufacturer Contemplates a Change in Technology That Would Reduce

Multiple Choice

A manufacturer contemplates a change in technology that would reduce fixed costs from $800,000 to $600,000, and reduce depreciation expense from $125,000 to $100,000.However, the ratio of variable costs to sales will increase from 68 percent to 80 percent.What will happen to break-even level of revenues?

A) A reduction to the level of $875,000
B) A reduction to the level of $2,890,625
C) An increase to the level of $3,500,000
D) An increase to the level of $3,625,000 Break even = (600,00 + 100,000) /.2