Mrs. Tisdale is going to sell Christmas tree lights for $40 a box. The lights cost Mrs. Tisdale $10 a box and any unsold lights can be returned for a full refund. She is planning to rent a booth at the upcoming Happy Holidays Convention, which offers three options:
1) paying a fixed fee of $3,000, or
2) paying a $1,000 fee plus 10% of revenues made at the convention, or
3) paying 25% of revenues made at the convention.

Which of the following statements is FALSE?

Question

Mrs. Tisdale is going to sell Christmas tree lights for $40 a box. The lights cost Mrs. Tisdale $10 a box and any unsold lights can be returned for a full refund. She is planning to rent a booth at the upcoming Happy Holidays Convention, which offers three options:
1) paying a fixed fee of $3,000, or
2) paying a $1,000 fee plus 10% of revenues made at the convention, or
3) paying 25% of revenues made at the convention.

Which of the following statements is FALSE?

Quizplus · Accepted Answer

Option 3 (paying 25% of revenues) does not always guarantee the greatest operating income because the best option depends on the total revenue. The fixed costs and variable costs associated with each option affect the operating income differently at different revenue levels.

Mrs Tisdale Is Going to Sell Christmas Tree Lights for $40