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Bristol Printing Company currently leases its only copy machine for $1.200 a month. The company is considering replacing this leasing agreement with a new contract
Bristol Printing Company currently leases its only copy machine for $1.200 a month. The company is considering replacing this leasing agreement with a new contract that is entin commission based Under the new agreement, Bristol would pay a commission for its printing at a rate of $25 for every 500 pages printed The company currently charges 50 23 page to its customers. The paper used in printing costs the company $0 01 per page and other variable costs, including hourly labor amount to $0 10 per page Read the requirements In order to determine the range of sales levels Bristol would prefer for each agreement, we must first calculate the indifference point The indifference point = sales volume at which the income from alternative 1 equals the income from alternative 2 Now calculate the indifference point (Round to the nearest whole number) The indifference point is at 24,000 units Bristol would prefer the fixed lease agreement at sales more that the indifference point The commission based agreement would be preferred at units up to the indifference point Requirement 3. Bristol estimates that the company is equally likely to sell 24,000, 34,000 44,000,54,000 or 64,000 pages of print Using information from the original problem, prepare a table that shows the expected profit at each sales levet under the fixed leasing agreement and under the commission-based agreement What in the expected value of agreement? Which agreement should Bristol choose? Begin with the fixed leasing agreement (Use parentheses or a minus sign for losses) Fixed leasing agreement Expected Sales level Profill(Loss) Profit(Loss) 24.000 34 000 44,000 54,000 64,000 Total expected protuloss)
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