Astro Co. sold 18,000 units of its only product and incurred a $131,500 loss (ignoring taxes) for the current year...

Astro Co. sold 18,000 units of its only product and incurred a $131,500 loss (ignoring taxes) for the current year as shown here. During a planning session for year 2014’s activities, the production manager notes that variable costs can be reduced 50% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $280,000. The maximum output capacity of the company is 40,000 units per year.