# Jane Tamlyn paid $225 to rent a carnival booth for four days. She has to decide whether to sell doughnuts or popcorn. Doughnuts cost $1.50 per dozen and can be sold for $3.00 per dozen. Popcorn will require a $115 rental fee for the popcorn maker and $0.15 per bag of popcorn for the popcorn, butter, salt, and bags; a

Jane Tamlyn paid $225 to rent a carnival booth for four days. She has to decide whether to sell doughnuts or popcorn. Doughnuts cost $1.50 per dozen and can be sold for $3.00 per dozen. Popcorn will require a $115 rental fee for the popcorn maker and $0.15 per bag of popcorn for the popcorn, butter, salt, and bags; a bag of popcorn could sell for $0.65.

Required:

1. Compute the break-even point in dozens of doughnuts if Jane decides to sell doughnuts exclusively and the break-even point in bags of popcorn if she decides to sell popcorn exclusively.

2. Jane estimates that she can sell either 75 doughnuts or 45 bags of popcorn every hour the carnival is open (10 hours a day for four days). Which product should she sell?

3. Jane can sell back to the baker at half cost any doughnuts she fails to sell at the carnival. Unused popcorn must be thrown away. If Jane sells only 70% of her original estimate, which product should she sell? (Assume that she bought or produced just enough to satisfy the demands she originally estimated.)

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**Related Book For**

## Accounting concepts and applications

11th Edition

**Authors:** Albrecht Stice, Stice Swain

**ISBN:** 978-0538745482