Mullis Corp

Multiple Choice

Mullis Corp. manufactures DVDs that sell for $5.00. Fixed costs are $28,000 and variable costs are $3.60 per unit. Mullis can buy a newer production machine that will increase fixed costs by $8,000 per year, but will decrease variable costs by $0.40 per unit. What effect would the purchase of the new machine have on Mullis' break-even point in units?

A) 9,850 unit decrease.
B) 4,444 unit increase.
C) 5,714 unit increase.
D) No effect.
E) 4,444 unit decrease.