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328 Chapter 6 Problem 3 Sarena Wilkes, owner of the San Jose Café, is negotiating with the lessor regarding the lease of the building for the next five years. The lessor has proposed the following lease payment alternatives. Monthly fixed lease payment of $2,000. 1. Monthly fixed lease payment of $1,000 plus 3 percent of net sales. 2. Monthly variable lease payment of 6 percent of net sales. 3. Required: 1. What is the indifference point among the three proposals? 2. If expected average annual net sales are $350,000, which lease payment alternative should be recommended to Sarena Wilkes? 3. If expected average annual net sales are $500,000, which lease payment alternative should be recommended to Sarena Wilkes? Problem 4 The following monthly income statement has been prepared by Dwayne Kris, CPA, for Troy Caballo, the owner of the Caballo Inn. As Mr. Caballo's private consultant, you are asked to explain several cost relationships. Caballo Inn Income Statement For the month

328 Chapter 6 Problem 3 Sarena Wilkes, owner of the San Jose Café, is negotiating with the lessor regarding the lease of the building for the next five years. The lessor has proposed the following lease payment alternatives. Monthly fixed lease payment of $2,000. 1. Monthly fixed lease payment of $1,000 plus 3 percent of net sales. 2. Monthly variable lease payment of 6 percent of net sales. 3. Required: 1. What is the indifference point among the three proposals? 2. If expected average annual net sales are $350,000, which lease payment alternative should be recommended to Sarena Wilkes? 3. If expected average annual net sales are $500,000, which lease payment alternative should be recommended to Sarena Wilkes? Problem 4 The following monthly income statement has been prepared by Dwayne Kris, CPA, for Troy Caballo, the owner of the Caballo Inn. As Mr. Caballo's private consultant, you are asked to explain several cost relationships. Caballo Inn Income Statement For the month

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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328 Chapter 6 Problem 3 Sarena Wilkes, owner of the San Jose Café, is negotiating with the lessor regarding the lease of the building for the next five years. The lessor has proposed the following lease payment alternatives. Monthly fixed lease payment of $2,000. 1. Monthly fixed lease payment of $1,000 plus 3 percent of net sales. 2. Monthly variable lease payment of 6 percent of net sales. 3. Required: 1. What is the indifference point among the three proposals? 2. If expected average annual net sales are $350,000, which lease payment alternative should be recommended to Sarena Wilkes? 3. If expected average annual net sales are $500,000, which lease payment alternative should be recommended to Sarena Wilkes? Problem 4 The following monthly income statement has been prepared by Dwayne Kris, CPA, for Troy Caballo, the owner of the Caballo Inn. As Mr. Caballo's private consultant, you are asked to explain several cost relationships. Caballo Inn Income Statement For the month
Transcribed Image Text:328 Chapter 6 Problem 3 Sarena Wilkes, owner of the San Jose Café, is negotiating with the lessor regarding the lease of the building for the next five years. The lessor has proposed the following lease payment alternatives. Monthly fixed lease payment of $2,000. 1. Monthly fixed lease payment of $1,000 plus 3 percent of net sales. 2. Monthly variable lease payment of 6 percent of net sales. 3. Required: 1. What is the indifference point among the three proposals? 2. If expected average annual net sales are $350,000, which lease payment alternative should be recommended to Sarena Wilkes? 3. If expected average annual net sales are $500,000, which lease payment alternative should be recommended to Sarena Wilkes? Problem 4 The following monthly income statement has been prepared by Dwayne Kris, CPA, for Troy Caballo, the owner of the Caballo Inn. As Mr. Caballo's private consultant, you are asked to explain several cost relationships. Caballo Inn Income Statement For the month
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