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:

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.

Question

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:
  
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.

Quizplus · Accepted Answer

The Answer of 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:
  
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.

Karen Hefner,a Florist,operates Retail Stores in Several Shopping Malls