Continued. A company is operating at full capacity. Annual revenues are $50,000,000.

(c) The company is considering of certain production processes. Productive capacity will not be increased, but the contribution margin ratio will increase by 5% of sales via a reduction in direct labor. The automated equipment will cost $5,000,000 per year to operate. Should the equipment be purchased?

(d) The company is considering increasing the sales price per unit by 10%. The fixed costs and variable per unit cost will not be affected, but (in units) will be reduced by 10%. Decide whether the company will be more or less profitable if they engage this pricing strategy.