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Golf Accessories Ltd. manufactures golf gloves which sell for an average price of $16.00. Currently,...

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Finance

Golf Accessories Ltd. manufactures golf gloves which sell for an average price of $16.00. Currently, the company employs a number of workers to make the leather gloves, such that variable costs are $12.50 per glove, and the companys total fixed costs are $350,000 per year. Derry Cale, the owner, is evaluating the acquisition of a new machine which will sew the leather gloves on an automated basis. If the owner acquires the machine, total fixed costs per year will increase to $575,000 but variable costs per glove will be reduced to $11.25 per unit. The owner is interested in the new machine but not if the Break-Even point for the companys sales for this particular glove would be increased by more than 25%. If the estimates are accurate about total fixed costs and variable costs per unit, What would be the Break-Even point with the new machine? Would it make sense to acquire the new machine if the owners company can easily sell at least 150,000 gloves per year

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