Question

Two automatic systems for dispensing maps are being compared by the state highway department. The accompanying breakeven chart of the compar- ison of these systems (System I vs. System IT) shows 2-16 total yearly costs for the number of maps dispensed per year for both alternatives. Answer the following questions.
(a) What is the fixed cost for System I?
(b) What is the fixed cost for System II?
(c) What is the variable cost per map dispensed for System I?
(d) What is the variable cost per map dispensed for System 11?
(e) What is the breakeven point in terms of maps dispensed at which the two systems have equal annual costs?

Answer 1

Full question attached

Answer:

A. $1000

B. $5000

C. $0.9

D. $0.10

E. 5 maps

Explanation:

A. From the diagram in the question, we can see the equation of the cost, the constant to the right of the equation is the fixed cost

B. The same is applicable as in question A

C. The variable cost can be seen in the equation where we observe the cost per map- 0.9 per unit X

D. Same is applicable as in question C

E. The break-even point is 5 maps as seen in diagram in question. At this point both equations equal $5500