Recreational Sports, an outdoor sports retailer, is planning to add a website 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?

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Alternative 1 Alternative 2 Annual fixed cost Variable cost per order Expected number of orders $200,000 $400,000 4 4 70,000 70,000