Work the following problem in
Work the following problem in Excel or Excel QM
Zoe Garcia is the manager of a small office-support businessthat supplies copying, binding, and other services for localcompanies. Zoe must replace a worn-out copy machine that is usedfor black-and- white copying. Two machines are being considered,and each of these has a monthly lease cost plus a cost for eachpage 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 amonthly lease cost of $400, and there is a cost of $0.015 per pagecopied. Customers are charged $0.05 per page for copies.
Answer:
What is the break-even point for each machine?
Machine 1: $ 15,000
BEP = f / ( s – v )
=600/(0.05-0.01)
=15,000
MAchine 2:
=400/(0.05-0.015)
=11428.57
If Zoe expects to make 10,000 copes per month, what is the costfor each machine?
Machine 1: $ 700
Proft = TR – TC
TR = s * X
S = 0.05
X = 10000
TR = 500
TC = fi+ (v * X)
fi = 600
v = 0.01
X = 10000
=600+(0.01*10000)
=700
Machine 2: $
550
TC = fi+ (v * X)
fi = 400
v = 0.015
X = 10000
=400+(0.015*10000)
=550
If Zoe expects to make 30,000 copes per month, what is the costfor each machine?
Machine 1: $ 900
Proft = TR – TC
TR = s * X
S = 0.05
X = 30000
TR =0.05*30000
TR = 1500
TC = fi+ (v * X)
fi = 600
v = 0.01
X = 30000
=600+(0.01*30000)
=900
Machine 2: $
550
TC = fi+ (v * X)
fi = 400
v = 0.015
X = 30000
=400+(0.015*30000)
=850
At what volume (the number of copes) would the two machines havethe same monthly cost?
40,000
TC1 = TC2
f1+(v1*X)=f2+(v2*X)
600+(0.01*X) = 400 + (0.015*X)
600-400=0.015X – 0.01X
200/0.005=X
200/0.005 = 40000
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