each establishment. (Hint: To specify a decision rule, determine the volume at which FastQ would be indifferent between the small and medium copiers. Then determine the volume at which FastQ would be indifferent between the medium and large copiers.)
each establishment. (Hint: To specify a decision rule, determine the volume at which FastQ would be indifferent between the small and medium copiers. Then determine the volume at which FastQ would be indifferent between the medium and large copiers.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Annual capacity (copies)
Costs:
Annual machine rental
Direct material and direct labor
Variable overhead costs
Required 1A Required 1B
At least
10245
100,000
Complete this question by entering your answers in the tabs below.
Anticipated Annual Volume
But not more than
$ 7,000
0.02
0.12
a. Calculate the volume level in copies where FastQ Company would be indifferent to acquiring either the small-volume model laser
copier, 1024S, or the medium-volume model laser copier, 1024M.
b. The management of FastQ Company is able to estimate the number of copies to be sold at each establishment. Present a decision
rule that would enable FastQ Company to select the most profitable machine without having to make a separate cost calculation for
each establishment. (Hint: To specify a decision rule, determine the volume at which FastQ would be indifferent between the small
and medium copiers. Then determine the volume at which FastQ would be indifferent between the medium and large copiers.)
1
800,000
Copier Model
1024M
350,000
$ 11,000
0.02
0.07
The management of FastQ Company is able to estimate the number of copies to be sold at each establishment. Present a
decision rule that would enable FastQ Company to select the most profitable machine without having to make a separate cost
calculation for each establishment. (Hint: To specify a decision rule, determine the volume at which FastQ would be indifferent
Show more:
Optimal Model
Choice
1024G
800,000
$ 20,000
0.02
0.03
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