A manufacturing company has to decide between their current process which has a variable cost of $10/unit and investing in new equipment which will reduce the variable cost to $5/unit. The new equipment will cost $100,000. Use a break-even analysis to determine the number of units that the company will need to build to make the investment in the new equipment worthwhile. What is the break-even volume?

Question

A manufacturing company has to decide between their current process which has a variable cost of $10/unit and investing in new equipment which will reduce the variable cost to $5/unit.  The new equipment will cost $100,000.  Use a break-even analysis to determine the number of units that the company will need to build to make the investment in the new equipment worthwhile.  What is the break-even volume?