Ludlam Company and Kassandra Company both make school desks. They have the same production capacity, but Ludlam is more automated than Kassandra. At an output of 2,500 desks per year, the two companies have the following costs:

Assuming that both companies sell desks for $100 each and that there are no other costs or expenses for the two firms, complete the following:
1. Which company will lose the least money if production and sales fall to 1,000 desks per year?
2. What would be each company€™s profit or loss at production and sales levels of 1,000 desks per year?
3. What would be each company€™s profit or loss at production and sales levels of 4,000 desks peryear?

Transcribed Image Text:

Kassandra Ludlam Fixed costs Variable costs at $20 per desk. Variable costs at S50 per desk. Total cost. Urit cost (2,500 desks) $100,000 S 25,000 125,000 S150,000 60 $150,000 60