Assume that quantity produced = quantity demanded = quantity sold
Peter Neutron is the manager of a MailMax store which provides services such as copying, scanning, and faxing in a small university town.
Peter must replace an old copy machine and is considering two models from a local electronics firm.
Machine A has an annual lease cost of $5,000 and a cost per copy of $0.02. Machine B has an annual lease cost of $3500 with a cost per copy of $0.025
Customers would be charged $0.10 per copy.
a. Create a profit model for each Machine – use your models to answer the questions below.
b. Find the break-even quantity for each Machine.
c. If Peter expects to make 200,000 copies per year, what would be the cost for each machine?
d. Create a graph that shows the monthly cost for both machines over a quantity range of 0 to 500,000 units.
e. Use your graph to approximately determine at what volume the two machines have the same monthly cost.