Mrs. Tannenbaum is going to sell Christmas tree lights for $40 a box. The lights cost Mrs. Tannenbaum $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? Her decision will determine the risk she faces. Contribution margin will vary depending upon the option chosen. One of the options will allow Mrs. Tannebaum to break even, even if she doesn't sell any lights. Operating income will be the greatest for Option 3.
Mrs. Tannenbaum is going to sell Christmas tree lights for $40 a box. The lights cost Mrs. Tannenbaum $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?
|
Her decision will determine the risk she faces. |
||
|
Contribution margin will vary depending upon the option chosen. |
||
|
One of the options will allow Mrs. Tannebaum to break even, even if she doesn't sell any lights. |
||
|
Operating income will be the greatest for Option 3. |
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
