Francis Furniture has current fixed costs of $1 million. Francis’s only product, a rolltop desk, sells for $3,000. Variable operating costs per unit are $1,000. Francis plans to buy a new lathe that will produce a more precise roller for the desk. The lathe will add $100,000 in annual fixed costs. Variable operating costs are not expected to change as a result of the lathe purchase. If Francis wishes to leave its breakeven point unchanged, what action must it take?
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