$3-45$ Alternate cost structures, uncertainty, and sensitivity analysis.

Corporate Printing Company currently leases its only copy machine for $$1,500$ a month. The company is considering replacing this leasing agreement with a new contract that is entirely commission based. Under the new agreement, Corporate would pay a commission for its printing at a rate of $$20$ for every $500$ pages printed. The company currently charges $$0\mathrm{.}20$ per page to its customers. The paper used in printing costs the company $$0\mathrm{.}05$ per page and other variable costs, including hourly labor, amount to $$0\mathrm{.}10$ per page.

Required:

What is the company's breakeven point under the current leasing agreement? What Iis it under the new commission$-$based agreement?

For what range of sales levels will Corporate prefer $($a$)$ the fixed lease agreement and $($b$)$ the commission agreement?