A bakery has a choice of leasing different types of ovens. Oven A will cost $1,000 per year to lease and operate, plus $0.50 per cake baked. Oven B will cost $3,000 per year to lease and operate, plus $0.40 per cake baked. Find the indifference point at which the annual costs of the two ovens are equal.
A)200 cakes.
B)20,000 cakes.
C)40,000 cakes.
D)None of these.

Question

Quizplus · Accepted Answer

$1,000 + $0.50/cake = $3,000 + $0.40/cake, breakeven = $2,000/$0.10/cake = 20,000 cakes

A Bakery Has a Choice of Leasing Different Types of Ovens