Financial services firm is considering three alternatives

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A financial services firm is considering three alternatives (denoted A, B and C) for providing a new investment service to its customers. The revenue from a customer using the service is estimated at $100 per customer served. Alternative A relies on a good deal of advice from a client service representative and has a monthly fixed cost of $4,000 and a variable cost of $80 per customer served. Alternative B uses a limited amount of advice from a client service representative and has a monthly fixed cost of $8,000 and the variable cost is $50 per customer served. Alternative C is an automated service that has a monthly fixed cost of $20,000 and the variable cost is $10 per customer served. What output level produces an annual profit of $90,000 with Alternative A? b) Determine the range of output over which Alternative B is profitable c) Determine the range of output over which Alternative B is best and is profitable.

Reference no: EM132293937

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