Karen Hefner, a florist, operates retail stores in several she , a florist, operates retail stores in
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Question:
- Karen Hefner, a florist, operates retail stores in several she ", a florist, operates retail stores in several shopping malls. The average selling price of an arrangement is $30 and the average cost of each sale is $18. A new mall is opening where Karen wants to locate a store, but the location manager is not sure about the renting method to accept. The mall operator offers the following three options for its retail store rentals:
- 1. paying a fixed rent of $15,000 a month, or
- 2. paying a base rent of $9,000 plus 10% of the revenue received, or
- 3. paying a base rent of $4,800 plus 20% of the revenue received up to a maximum rent of $25,000.
- Required:
- a. For each option, compute the breakeven sales and the monthly rent paid at break-even.
- b. Beginning at zero sales, show the sales levels at which each option is preferable up to 5,000 units.
Related Book For
Managerial accounting
ISBN: 978-0471467854
1st edition
Authors: ramji balakrishnan, k. s i varamakrishnan, Geoffrey b. sprin
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