Jane receives proposals from four companies we'll call Able, Baker, Champ, and Dart on the cost to supply a specific product for the coming year. She takes the bids and creates this graph to bring to the next executive meeting. Jane usually selects the supplier based on lowest cost. She asks for costs for volumes between 0 and 20,000 units (x-axis). The suppliers provide her with the total cost for each possible volume of product.

1. Describe a general approach for determining the variable cost of any of the companies in this plot.

1. Which of the companies has the greatest variable cost per unit? Using the chart (estimate the values from the chart) - what company has the highest variable cost. Show your calculations.
2. What is the point of indifference between company Able and company Champ? (Remember: Point of indifference is the volume at which the two cost curves intersect). Show your calculations.

1. How does this point of indifference affect Jane's decision to choose a supplier to supply product at this volume?

Proposal Cost ($ vs Volume) 480000 460000 440000 420000 400000 380000 360000 340000 320000 300000 280000 260000 Cost 240000 220000 200000 180000 160000 140000 120000 100000 80000 60000 40000 20000 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 11000 12000 13000 14000 15000 16000 17000 18000 19000 20000 Volume Able Baker "Champ Dart