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Home Q & A Board Other Fields Homework Help Business Accounting
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jerico jerico
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9 years ago
Karen Hefner, 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 rent 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 revenue received, or
   3.   paying a base rent of $4,800 plus 20% of 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.
Textbook 
Cost Accounting

Cost Accounting


Edition: 14th
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cyborgcyborg
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9 years ago
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jerico Author
wrote...
#2
9 years ago
This solved my problem perfectly, thank you for your kind input.
wrote...
#3
9 years ago
Cool! No problem.
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#4
3 years ago
Thank you!
wrote...
#5
3 years ago
Thanks
wrote...
#6
3 years ago
thank you
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