What is the point of indifference between company A and company C? How does this point of indifference affect Yowzah's decision?
What will be an ideal response?
Answer: Company A appears to have a fixed cost of 75,000 and company C appears to have a fixed cost of 160,000. The variable cost (slope) for company A is (375,000 - 75,000)/20,000 = 15. The variable cost (slope) for company C is (280,000 - 160,000)/20,000 = 6.
The point of indifference can be found by setting the two lines equal to each other, so 75,000 + 15x = 160,000 + 6x; 9x = 85,000; x = 9444.4
The point of indifference doesn't affect Yowzah's decision in this range as both companies have higher costs than their fierce rival company B around this range of output.
You might also like to view...
The one-group, before-after design is a quasi-experimental design
Indicate whether the statement is true or false
Several times during the winter, supervisor Clyde goes ice fishing with Bubba, one of the workers in his department. After fishing they often have a few beers together
When it comes time for Clyde to write a performance evaluation of Bubba, Clyde faces the ethical dilemma of ________. A) dealing with confidential information B) sexual harassment C) treating people unfairly D) conflict of interest