Forrester Company Is Considering Buying New Equipment That Would Increase

Multiple Choice

Forrester Company is considering buying new equipment that would increase monthly fixed costs from $120,000 to $150,000 and would decrease the current variable costs of $70 by $10 per unit.The selling price of $100 is not expected to change.Forrester's current break-even sales are $400,000 and current break-even units are 4,000.If Forrester purchases this new equipment,the revised contribution margin ratio would be:

A) 30%.
B) 60%.
C) 40%.
D) 10%.
E) 70%.