Phases of trial and error


As a result of many phases of trial and error, two techniques for producing playing cards have been identified by the Modest Mouse Company. One techniques involves using machine having a fixed cost of $10,000 and variable costs of $1.00 per deck of cards. The other method would use a less expensive machine (fixed cost = $2,000), but it would require greater variable costs ($1.40 per deck of cards). If the selling price per deck of cards will be the same under each method, at what level of output will the two methods produce the same net operating income (EBIT)?

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Finance Basics: Phases of trial and error
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