Location X has monthly fixed costs of $100,000 and per-unit variable costs of $10. Location Y has monthly fixed costs of $150,000 and per-unit variable costs of $9. At what volume would these locations have equal total costs?
Location X has monthly fixed costs of $100,000 and per-unit variable costs of $10. Location Y has monthly fixed costs of $150,000 and per-unit variable costs of $9. At what volume would these locations have equal total costs?
To find the volume at which both locations have equal total costs, we need to set the total cost equations equal to each other and solve for the quantity (Q). For Location X, the total cost equation is TC_X = $100,000 + $10Q. For Location Y, the total cost equation is TC_Y = $150,000 + $9Q. Setting these equal to each other: $100,000 + $10Q = $150,000 + $9Q. Subtracting $9Q from both sides: $100,000 + $Q = $150,000. Subtracting $100,000 from both sides: $Q = $50,000. Therefore, the volume at which the total costs are equal is 50,000 units.
=15-100/10-9=50