Answer:
The indifference point is at 50,000 units.
Explanation:
Given the following details:
Location choice I incurs monthly fixed expenditures of $100,000 and variable costs of $10 per unit. In contrast, location choice J has fixed monthly costs of $150,000 with variable costs of $9 per unit.
To find the total cost equations for both locations, we must first derive them:
For Location I:
Total cost = 100,000 + 10x
For Location J:
Total cost = 150,000 + 9x
To compute the indifference point, we need to isolate X:
100,000 + 10x= 150,000 + 9x
x= 50,000 units
Thus, the indifference point is 50,000 units.
