Grocers Inc. is considering offering a purified water service through a contract company that would locate a machine on the inside of the market store. There are two contract companies Grocers Inc. is considering, ClearWater and PureVida. ClearWater would charge an annual lease fee of $800 for set-up of the machine and for this machine, there is a utility cost of $0.10 for every gallon of water dispensed and ClearWater charges $0.05 for maintenance. For PureVida, the annual lease fee is $700, the utility cost is $0.12 for every gallon and PureVida charges $0.06 for maintenance. Grocers Inc. customers would purchase refilled gallons of water for $0.97.
a. What is the annual break-even point for each option?
b. At what volume in number of gallons would the two options have the same cost?
c. At what