Two firms: Same sales revenue but different fixed and variable costs.

LOL: Low fixed costs (HOL): High fixed costs

Price/unit (P) $80 $80

Variable Cost/unit (VCU) $45 $30

Fixed Cost (FC) $3,000 $12,000

Use the information in the table to answer each of the following (show your work!)

a. Calculate the indifference point in unit sales (show your work)

b. Calculate the DOL for the HOL firm at the indifference point (show your work)

c. Draw the graph (label the axis). Draw the lines (label them LOL and HOL) from the Y-axis (label it) through the indifference point for both options (label it). Be sure to put values for the Y-axis intercept for both firms, the x-axis intercept (breakeven points), and the indifference point.