The Wildhorse Publications Textbook Company sells all of its books for $100 per book, and it...

The Wildhorse Publications Textbook Company sells all of its books for $100 per book, and it currently costs $50 in variable costs to produce each text. The fixed costs, which include depreciation and amortization for the firm, are currently $2 million per year. Management is considering changing the firm’s production technology, which will increase the fixed costs for the firm by 36 percent but decrease the variable costs per unit by 36 percent. If management expects to sell 45,000 books next year, should they switch technologies? (Round answers to nearest whole dollar,e.g. 5,275.)

The current EBIT for the firm is $ .

If the firm changes technology, the firm’s new EBIT will be $ .

The firm should select an option the new technologies.

Expert Solution

COMPANY SHOULD SWITCH TECHNOLOGY AS EBIT HAS INCREASED BY 90000

jeff jeffy answered 7 months ago

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