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A manager must decide how many machines of a certain type to purchase. Each machine can process 100 customers per day. One machine will result in a fixed cost of $2000 per day, while two machines will result in a fixed cost of $3800 per day. Variable costs will be $20 per customer, and revenue will be $45 per customer.
A. Determine the break-even point for each range.
B. If estimated demand is 90 to 120 customers per day, how many machines should be purchased?
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