Tasty Burger is thinking of making the hamburger rolls for its chain of fast food restaurants. Two machines, $\mathrm{A}$ and $\mathrm{B}$, are being considered for purchase. The company now purchases the rolls from an outside supplier for I2 cents each. The cost information for producing the rolls would be:

1. At a sales volume of 300,000 rolls per year, which of these alternatives is better -buying the rolls, using machine A, or using machine B? (Ignore the time value of money, and assume straight-line depreciation.)
2. At what level of production would you be indifferent to machine $\mathbf{A}$ and machine $B$ ? Which machine is preferable if production exceeds this volume?

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Machine A Machine B Variable costs per roll Annual fixed costs.. Initial cost of machine Salvage value at end of five years Estimated life of machine.. $0.08 $1,750 $5,000 SO 5 years $0.07 $2,500 $12,000 $4,000 5 years