A landscaping company is considering renting a backhoe (a type of excavating equipment) at $12,000 for the season. The variable cost of completing a landscaping project with the use of the backhoe is $500. Alternatively, without the use of the backhoe, the company would incur a variable cost of $1,000 per landscaping project and no fixed costs. If the landscaping company plans to complete more than _____ projects, the total cost of landscaping projects will be lower _____.
A) 24; with the backhoe
B) 18; with the backhoe
C) 44; without the backhoe
D) 12; without the backhoe

Question

Quizplus · Accepted Answer

If the company completes more than 24 projects, the total cost will be lower with the backhoe. The break-even point is calculated by setting the total costs equal: $12,000 + $500x = $1,000x, solving for x gives 24 projects.

A Landscaping Company Is Considering Renting a Backhoe (A Type