Develop an indifference cutoff quantity

Reference no: EM131874063

Question: A firm is considering two locution alternatives: A and B. Alternative A would have an Mutual fixed cost of $250,000 and variable costs of $18 per unit. Alternative B would have annual costs of $200,000 and variable costs of $25 per unit. Revenue is expected to be $40 per unit for both locations.

(i) Develop an indifference cutoff quantity for these two locations

(ii) Which alternative would require the lower volume of output to generate an annual profit of $50,000?

Reference no: EM131874063

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