Question
Bernie Harris is considering different options for making or buying goods for her catering business that she would then (re)sell. She can buy the goods
Bernie Harris is considering different options for making or buying goods for her catering business that she would then (re)sell. She can buy the goods for $210.00 each (this is the "Buy" option). The "MedFCMedVC" option allows her to make the goods with a medium fixed cost of $90,000.00 and medium variable cost of $65.00. The "HighFCLowVC" option allows her to make the goods with a high fixed cost of $210,000.00 and low variable cost of $20.00. She can sell each good for $270.00.
a. What is the point in units where the MedFCMedVC and HighFCLowVC options are equally attractive (from a cost standpoint)? Go to at least three decimal places for the intermediate steps (so 12.1786 would be rounded as 12.179) and final answer (so 12.1786 would be rounded as 12.179).
b. How much profit would Bernie have at the point where the Buy and MedFCMedVC options are equally attractive (from a cost standpoint)? Go to at least three decimal places for the intermediate steps (so 12.1786 would be rounded as 12.179) and two decimal places for the final answer (so 12.1781 would be rounded as 12.18).
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