Question

a. A Korean Seniors' Luncheon Club in Milton Keynes recently looked at two options for transporting members to the club and then home after lunch. Ezee Cabs quoted a flat fee of £120 per week, while Class Motors wanted an upfront payment of £300 and then a flat fee of £90 per week. Using the concept of a break-even chart, determine which of the two options is more economical, and after which point it becomes so. (In other words, which option will be of lower cost in the longer term. Consider a period of four months in your deliberations, and determine whether a point is reached where one option becomes cheaper than the other.)

Answer 1

Considering the above given that use break even Analysis method for graph considering the graph at the number of weeks 120 x = 300 + 90 x 30 x = 300 x = 10 10 weeks we will able to re cover the amount is 300 2 fixed cost of class motors 90 per week of costing 120 week \r\n break even point is period 10 week at less than 10 weeks at economical for long term & period of 4 mounts then the class motors will be more economical