Requirement 1. What is the company's breakeven point under the current leasing agreement? What is it under the new commission-based agreement?

First, determine the formula used to calculate the breakeven point in units, then calculate the company's breakeven point under the current leasing agreement. (Enter a "0" for any zero balances.)

Next, calculate the expected profit at each sales level under the commission based agreement.

Bristol Printing Company currently leases its only copy machine for $1,800 a month. The company is considering replacing this leasing agreement with a new contract that is entirely commission based. Under the new agreement, Bristol would pay a commission for its printing at a rate of $10 for every 500 pages printed. The company currently charges $0.30 per page to its customers. The paper used in printing costs the company $0.10 per page and other variable costs, including hourly labor, amount to $0.12 per page. any zero parances.) = Breakeven number of units What is it under the new commission-based agreement? (Enter a "0" for any zero balances.) The company's breakeven point under the new commission-based agreement is units. Requirement 2. For what range of sales levels will Bristol prefer (a) the fixed lease agreement and (b) the commission agreement? 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 = Choose from any list or el sales volume at which the income from alternative 1 equals the income from alternative 2. sales volume at which revenues from alternative 1 equals the revenues from alternative 2. volume at which income = $0. O units up to the indifference point Now calculate the indifference point. (Round to th the indifference point The indifference point is at units. sales more than the indifference point Bristol would prefer the fixed lease agreement at The commission based agreement would be preferred at Requirement 3. Bristol estimates that the company is equ problem, prepare a table that shows the expected profit at , or 64,000 pages of print. Using inf nent and under the commission-base O units up to the indifference point Choose from any list or enter any number in the input the indifference point 2. sales more than 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 level under the fixed leasing agreement and under the commission-based agreement. What is the expected value of each 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 Profit/(Loss) Profit/(Loss) 24,000 34,000 44,000 54,000 64,000 Total expected profit/(loss) Commission-based agreement Expected Sales level Profit/(Loss) Profit/(Loss) 24,000 34,000 44,000 54,000 64,000 Total expected profit/(loss) 54,000 the commission-based 64,000 neither Total expected profit/(1 the fixed lease Bristol should choose agreement