Joan has three booth rental options at the bridal fair where she plans to sell her...
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Joan has three booth rental options at the bridal fair where she plans to sell her new product. The booth rental options are: Option 1 2 3 Variable Cost $0 5% of fair revenue 20% of fair revenue Fixed Cost $4,000 $3,000 $0 The product sells for $150 per unit. She is able to purchase the units for $50 each. Which option should Joan choose in order to maximize income assuming there is a 40% probability that 70 units will be sold and a 60% probability that 40 units will be sold? (5 marks) Joan has three booth rental options at the bridal fair where she plans to sell her new product. The booth rental options are: Option 1 2 3 Variable Cost $0 5% of fair revenue 20% of fair revenue Fixed Cost $4,000 $3,000 $0 The product sells for $150 per unit. She is able to purchase the units for $50 each. Which option should Joan choose in order to maximize income assuming there is a 40% probability that 70 units will be sold and a 60% probability that 40 units will be sold? (5 marks)
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Answer rating: 100% (QA)
To determine the option that will maximize Joans income we need to calculate the income for each boo... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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