Business, 21.06.2021 16:30 faizanaj3978

War Eagle Distributing wants to determine the most efficient method of transporting its new product- The Charles Barkley Paperweight. This item has been offered for sale for several years, but Mr. Barkley's public persona and popularity have grown steadily, and the 6-year forecast calls for year 1 sales of 1,000 pallets, with year 2-6 sales increasing by 400 pallets each year. Estimated year 1 costs of two transportation options being considered are shown below. Mode A Mode B
Variable Costs
Transportation Costs $240,000 $270,000
Inventory Cost $100,000 $30,000
Packaging Costs $120,000 $30,000
Fixed Cost $160,000 $420,000
Total Cost $620,000 $750,000

What is the Point of Indifference (where the total cost of each option is equal) in number of pallets?
a. 1,400
b. 1,800
c. 2,000
d. 2,400
e. 2,800

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