accounting
Answers
a. To calculate the volume level in copies where FASTQ Company would be indifferent to acquiring either the small-volume model laser copier, 1024S, or the medium-volume model laser copier, 1024M, the annual costs of both machines needs to be compared. This is accomplished by solving the equation:
0.02 (100,000) + 8,000 = 0.02 (x) + 11,000.
Solving for x yields x = 200,000.
Therefore, the volume level in copies where FASTQ Company would be indifferent to acquiring either the small-volume model laser copier, 1024S, or the medium-volume model laser copier, 1024M is 200,000 copies.
b. The decision rule that would enable FASTQ Company to select the most profitable machine without having to make a separate cost calculation for each establishment is:
If the estimated number of copies to be sold at an establishment is below or equal to 200,000 copies, the management should select the small-volume model, 1024S, as it is the most cost effective option.
If the estimated number of copies to be sold at an establishment is above 200,000 copies and below or equal to 350,000 copies, the management should select the medium-volume model, 1024M.
If the estimated number of copies to be sold at an establishment is above 350,