Question

Work the following problem in Excel or Excel QM

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.

Answer 1

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 cost for 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 cost for 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 have the 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