Kirstin is thinking about opening a Chinese restaurant and needs to buy a rice cooker. Machine A has fixed costs of $100 and variable costs of $1/pound. Machine B has fixed costs of $500 and variable costs of $.1/pound

If Kirstin plans to sell 100 pounds of rice, which machine should she choose? What is the cross-over point?

Machine A costs 100 + 1(100 ) = $200
Machine B costs $500 + .1(100 ) = $510
Thus she should buy machine A.
Crossover occurs when 100 + V = 500 + .1V, or V = 444.4 pounds of rice