Jerry the manager of a small printing company needs to repla

Jerry, the manager of a small printing company, needs to replace a worn out copy machine. He is considering two machines; each has a lease cost and cost per page that is copied: Machine 1 has a $440 monthly lease with a 2.1 cent per page cost up to 220 pages, and 1 cent after that Machine 2 has a $575 monthly lease and a 1.5 cent per page cost up to 220 pages, and 0.5 cent after that Jerry knows the break even point is more than 220 cases. Determine the break even point (per month in terms of number of copies) for each machine if Jerry charges customer 5 cents per copy. Based on that, which one do you recommend?

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Solution

Here let total number of copies at break even point be x and at this point, the cost prices of both machines will be equal to each other.

So total cost for machine 1 = lease cost + total cost of all pages.

= 440 + 0.021(220 )+0.01(x-220) = 440 + 4.62+0.01x - 2.2 (on using distributive rule a(b-c)=ab-ac here)

= 442.42 +0.01x

similarly total cost for machine 2 = 575 +0.015(220)+ 0.005(x-220)

= 575 +3.3 +0.05x - 1.1 = 577.2 + 0.005x

so 577.2+0.005x= 442.42 +0.01x

or 0.005 - 0.01 x= 442.42 - 577.2

i.e. - 0.005x = - 134.78

or x= 134.78/0.005 = 26956

so required asnwer is 26956.

Note : as you know that each formula in EXCEL starts with = sign, just use the cell addresses in formation of formula for total cost of each machine, in which you put above input values.