Zoe Garcia is the manager of a small office support business that supplies copying, binding, and other services for local companies. Zoe must replace a worn-out copy machine that is used for black and white copying. Two machines are being considered, and each of these has a monthly lease cost plus a cost for each page that is copied. Machine 1 has a monthly lease cost of $ 600, and there is a cost of $ 0.010 per page copied. Machine 2 has a monthly lease cost of $ 400, and there is a cost of $ 0.015 per page copied. Customers are charged $ 0.05 per page for copies.
(a) What is the break-even point for each machine?
(b) If Zoe expects to make 10,000 copies per month, what would be the cost for each machine?
(c) If Zoe expects to make 30,000 copies per month, what would be the cost for each machine?
(d) At what volume (the number of copies) would the two machines have the same monthly cost? What would the total revenue for this number of copies?
Solution:
Download free solution (doc)
|