Calculate the indifference point between the two cost

Reference no: EM13590094

The cost structure of two firms competing in the same industry is represented by the following cost formulas: Company X = $2,096,000 + $47/ unit; Company Z = $1,016,000 + $92/unit. The selling price is $140 per unit for both companies.
Required:

1.Calculate the indifference point between the two cost structures, that is, the amount of unit sales that produce exactly the same operating income for Company X and Company Z.

Indifference point volume ____units
2. If sales volume were expected to increase by 25% over the next two years, which cost structure would you prefer?
Company Z or Company X

Reference no: EM13590094

Questions Cloud

Nick has made the decision to seek this outside financing : warf computers inc. was founded 1 5 years ago by nick warf a computer programmer. the small initial investment to start

Mfg company experiences the following cost behavior : mfg company experiences the following cost behavior patterns each week fixed costs supervisors salary 2000 factory rent

If machine 2 was purchased on november 1 instead of april 1 : in recent years howard company has purchased three machines. because of fre- quent employee turnover in the accounting

Use the spreadsheet to determine the total profit for each : 1 consider a resource-allocation problem having the following

Calculate the indifference point between the two cost : the cost structure of two firms competing in the same industry is represented by the following cost formulas company x

There have been many theories regarding how the pyramids at : choose one 1 of the topics below and develop a three to four 3-4 paragraph essay of at least 250-500 words which

A newspaper ad submitted and published this week with the : 1. financial statement ratios support informed judgments and decision making most effectivelya. when viewed for a

A contractor susan meyer has to haul gravel to three : a contractor susan meyer has to haul gravel to three building sites. she can purchase as much as 18 tons at a gravel

The following information relates to a companys accounts : the following information relates to a companys accounts receivable accounts receivable balance at the beginning of the

User Account

All Pages