Mary Is Considering Purchasing a Machine from One of Two

question 166

Essay

Mary is considering purchasing a machine from one of two suppliers. Supplier A's machine has an annual fixed cost of $10,000 and a unit variable cost of $2.10. Supplier B's machine has an annual fixed cost of $16,000 and a unit variable cost of $3.00. How large should Mary's annual demand be in order to make Supplier B's machine the better choice?

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Definitions:

Educator Expense Deduction

A tax deduction allowed for teachers and educators for unreimbursed expenses on classroom supplies.

Community College

A type of educational institution that provides two-year associate degrees, certifications, and sometimes bachelor's degrees, often at a lower cost and with open enrollment.

Qualifying Education Expense

Expenses related to education, such as tuition and fees, that are necessary for enrollment or attendance at an eligible educational institution.

Student Loan Interest Deduction

A tax deduction available for the interest paid on student loans used for higher education, which can reduce taxable income.