Break-even point and cost indifference point Martinez Cleaners has experienced signifi- cant growth at its two downtown locations. Management is thinking about opening a new store in a large new shopping mall that is opening soon. Two types of cleaning systems are being evaluated. One is highly automated and requires a minimal amount of cleaning labor. The other system is a more conventional system that requires a good deal of manual work. Cost data for the two alternatives are listed below. Variable costs are expressed in terms of cost per 100 pounds of cleaning. Average revenue per 100 pounds is $60.

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Conventional Automatic Annual fixed cost: Depreciation on equipment $8,000 $22,000 Maintenance and insurance. 2,000 6,000 Variable cost per 100 pounds of cleaning: Labor $20.00 $5.00 Supplies 8.00 10.00 Other 4.00 2.00