# Foster Case Study.edited

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Florida State College at Jacksonville
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Running Head: FORSTER CASE STUDY 1
FORSTER CASE STUDY
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FORSTER CASE STUDY 2
Forster Case Study
Question 1
a. The Two Capacity Options
Forster is considering investing in a large coffee roaster. Therefore, he needs to consider the
capacity option of buying a large coffee roster and a capacity option of not buying a coffee
roaster.
b. Variable and Fixed Costs
The cost of the two options is;
Not buying option; Variable cost = \$3 per pound, and Fixed cost = 0
The buying option; Variable cost = \$1.60 per pound while Fixed cost = 35,000.
c. The Two Options Indifference Point
The indifference point is the point that the pound is the same for both options.
Total Pounds for not buying a roster = Total pound for not buying a roster
3Q+0=1.60Q+35,000,
1.4Q = 35,000
Quantity = 35,000/1.4
Quantity = 25,000 pounds

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