A non-profit organization is planning a raffle to raise money. It has two options for tickets. The first option is to do the tickets by hand, with fixed costs of $50 and variable costs of $.05 per ticket. The second option is to outsource production

This would result in fixed costs of $500 and variable costs of $.01. If the organization plans to sell 10,000 tickets which option should it choose?

50 + .05V = 500 + .01V, V = 11,250 tickets (students may solve for the cross-over point and realize higher VC option is cheaper at 10,000 since it is below the cross-over point). Another viable method is to find the cost for each option, yielding Option 1 = 50 + .05(10,000 ) = $550 and Option 2 = 500 + .01(10,000 ) = $600. Thus the organization should choose the first option.