Dennis Owen needs extra money quickly to help cover some unexpected school expenses. Mr. Owen has learned

Question:

Dennis Owen needs extra money quickly to help cover some unexpected school expenses. Mr. Owen has learned fortune-telling skills through his long friendship with Joel Allman, who tells fortunes during the day at the city market. Mr. Allman has agreed to let Mr. Owen use his booth to tell fortunes during the evening for a rent of $50 per night.

Required

a. What is the booth rental cost both in total and per customer if the number of customers is 5, 10, 15, 20, or 25?

b. Is the cost of renting the fortune-telling booth fixed or variable relative to the number of customers?

c. Draw two graphs. On one, plot total booth rental cost for 5, 10, 15, 20, and 25 customers; on the other, plot booth rental cost per customer for 5, 10, 15, 20, or 25 customers.

d. Mr. Owen has little money. What major business risks would he take by renting the fortunetelling booth? How could he minimize those risks?

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a Number of Customers a 5 10 15 20 25 Total rental cost b 50 50 50 50 50 Cost per customer ba 1000 500 333 250 200 b Since the cost of renting the boo...View the full answer

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Muhammad Salman Alvi

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Question Posted: Dec 07, 2011 03:22 AM

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Dennis Owen needs extra money quickly to help cover some unexpected school expenses. Mr. Owen has learned

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a Number of Customers a 5 10 15 20 25 Total rental cost b 50 50 50 50 50 Cost per customer ba 1000 500 333 250 200 b Since the cost of renting the boo...View the full answer

Fundamental Managerial Accounting Concepts

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