The Cupcake Heaven Factory plans to open a new retail store in Atlanta, Georgia. The store will
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Question:
The Cupcake Heaven Factory plans to open a new retail store in Atlanta, Georgia. The store will sell specialty cupcakes for $4 per cupcake (each cupcake has a variable cost of $1.) The company is negotiating its lease for the new store. The landlord has offered two leasing options: 1 a lease of $4,500 per month, or 2 a monthly lease cost of S3 500 plus 5% of the company's monthly sales revenue.
Requirements
1. If the Cupcake Heaven Factory plans to sell 4,500 cupcakes a month, which lease option would cost less each month? Why?
2. If the company plans to sell 6,000 cupcakes a month, which lease option would be more attractive? Why?
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