American Sports, an outdoor sports retailer, is planning to add a Web site for online sales. The estimated costs of two alternative approaches are as follows:

At the expected level of orders, which online approach has the lower cost? What is the indifference level of orders, or the “break-even” level of orders? What is the meaning of this level of orders?

Transcribed Image Text:

Alternative 1 Alternative 2 S315,000 7 45,000 $155,000 Annual fixed cost Variable cost per order Expected number of orders 45,000