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ashly138 ashly138
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6 years ago
Joan Perry has three booth rental options at the bridal fair where she plans to sell her new product. The booth rental options are:

Option 1: $4,000 fixed fee
Option 2: $3,000 fixed fee + 5% of all revenues generated at the fair
Option 3: 20% of all revenues generated at the fair.
The product sells for $150 per unit. She is able to purchase the units for $50.00 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?
A) Option 1 with expected operating income of $1,200
B) Option 2 with expected operating income of $1,810
C) Option 3 with expected operating income of $3,640
D) Option 3 with expected operating income of $4,160
E) Option 2 with expected operating income of $4,060
Textbook 
Cost Accounting: A Managerial Emphasis, Canadian Edition

Cost Accounting: A Managerial Emphasis, Canadian Edition


Edition: 7th
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AllopaAllopa
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6 years ago
Thank you, thank you, thank you!
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this is exactly what I needed
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