Cost indifference point The management of Land's Bottom mail order company is eval- uating methods of automating the customer billing system with the intention of improving the collection time on receivables. The selection has been narrowed to two billing systems. Bill-Fast would require leasing equipment for $6,000 a month. A maintenance contract and other fixed costs would amount to another $2,000 a month. Monthly variable costs including forms and other supplies would cost $.35 per customer. Other variable costs such as labor cost to run the equipment would be $.15 per customer. Speed-O-Bill is a more sophisticated system that is much faster than the other. However, it is more costly to lease and maintain. The monthly lease cost for Speed-O-Bill is $15,000. Maintenance and other fixed costs are $5,000 a month. Monthly variable costs per customer would be $.30.

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REQUIRED a. Compute the cost indifference point for the two alternatives. b. Describe the decision you would make based solely on the cost indifference point. c. Compute the total monthly cost of each system if there are 50,000 customer bills per month.