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Bluth's Original Frozen Banana Stand is a brand of frozen banana stands that operate at a variety of events and locations across Southern California. Recently you spotted a Bluth's Original Frozen Banana Stand during a visit to Newport Beach. On this beach, street vendors offer a variety of foods and drinks. At the Bluth's Original Frozen Banana Stand, beach goers can purchase a chocolate covered frozen banana covered with nuts for $4.00. For the purpose of this hypothetical example, let's assume that the variable cost of each banana sold is $1.00. There are three options of obtaining a Bluth's Original Frozen Banana Stand. Option 1: Pay a fixed rental fee to the Bluth Company for $2,100 per month Option 2: Pay a fee of $1,040 per month plus 10% of all revenue from banana sales Option 3: Pay 25% of all revenue from the snow cone sales to Bluth Company Using the hypothetical Bluth's Original Frozen Banana Stand example, calculate the number of bananas that the operator of a Bluth's Original Frozen Banana Stand has to sell each month to break-even if he/she decides to obtain the stand through option 1. O 700 525 O 347 400

Bluth's Original Frozen Banana Stand is a brand of frozen banana stands that operate at a variety of events and locations across Southern California. Recently you spotted a Bluth's Original Frozen Banana Stand during a visit to Newport Beach. On this beach, street vendors offer a variety of foods and drinks. At the Bluth's Original Frozen Banana Stand, beach goers can purchase a chocolate covered frozen banana covered with nuts for $4.00. For the purpose of this hypothetical example, let's assume that the variable cost of each banana sold is $1.00. There are three options of obtaining a Bluth's Original Frozen Banana Stand. Option 1: Pay a fixed rental fee to the Bluth Company for $2,100 per month Option 2: Pay a fee of $1,040 per month plus 10% of all revenue from banana sales Option 3: Pay 25% of all revenue from the snow cone sales to Bluth Company Using the hypothetical Bluth's Original Frozen Banana Stand example, calculate the number of bananas that the operator of a Bluth's Original Frozen Banana Stand has to sell each month to break-even if he/she decides to obtain the stand through option 1. O 700 525 O 347 400

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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Bluth's Original Frozen Banana Stand is a brand of frozen banana stands that operate at various events and locations across Southern California. Recently, you spotted a Bluth's Original Frozen Banana Stand during a visit to Newport Beach. On this beach, street vendors offer a variety of foods and drinks. At the Bluth's Original Frozen Banana Stand, beachgoers can purchase a chocolate-covered frozen banana with nuts for $4.00. For the purpose of this hypothetical example, let’s assume that the variable cost of each banana sold is $1.00. There are three options for obtaining a Bluth's Original Frozen Banana Stand. Option 1: Pay a fixed rental fee to the Bluth Company for $2,100 per month Option 2: Pay a fee of $1,040 per month plus 10% of all revenue from banana sales Option 3: Pay 25% of all revenue from the snow cone sales to Bluth Company Using the hypothetical Bluth's Original Frozen Banana Stand example, calculate the number of bananas that the operator of a Bluth's Original Frozen Banana Stand has to sell each month to break-even if he/she decides to obtain the stand through option 1. - 700 - 525 - 347 - 400
Transcribed Image Text:Bluth's Original Frozen Banana Stand is a brand of frozen banana stands that operate at various events and locations across Southern California. Recently, you spotted a Bluth's Original Frozen Banana Stand during a visit to Newport Beach. On this beach, street vendors offer a variety of foods and drinks. At the Bluth's Original Frozen Banana Stand, beachgoers can purchase a chocolate-covered frozen banana with nuts for $4.00. For the purpose of this hypothetical example, let’s assume that the variable cost of each banana sold is $1.00. There are three options for obtaining a Bluth's Original Frozen Banana Stand. Option 1: Pay a fixed rental fee to the Bluth Company for $2,100 per month Option 2: Pay a fee of $1,040 per month plus 10% of all revenue from banana sales Option 3: Pay 25% of all revenue from the snow cone sales to Bluth Company Using the hypothetical Bluth's Original Frozen Banana Stand example, calculate the number of bananas that the operator of a Bluth's Original Frozen Banana Stand has to sell each month to break-even if he/she decides to obtain the stand through option 1. - 700 - 525 - 347 - 400
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