Q1: Query Company sells pillows for $75.00 each. The manufacturing cost, all variable, is $8 per pillow. The company is planning on renting an exhibition booth for both display and selling purposes at the annual crafts and art convention. The convention coordinator allows three options for each participating company. They are: 1. paying a fixed booth fee of $3,210, or 2. paying an $2,000 fee plus 8% of revenue made at the convention, or 3. paying 15% of revenue made at the convention. Required: a. Compute the breakeven sales in pillows of each option. b. Which option should Query Company choose, assuming sales are expected to be 650 pillows?
Q1: Query Company sells pillows for $75.00 each. The manufacturing cost, all variable, is $8 per pillow. The company is planning on renting an exhibition booth for both display and selling purposes at the annual crafts and art convention. The convention coordinator allows three options for each participating company. They are: 1. paying a fixed booth fee of $3,210, or 2. paying an $2,000 fee plus 8% of revenue made at the convention, or 3. paying 15% of revenue made at the convention. Required: a. Compute the breakeven sales in pillows of each option. b. Which option should Query Company choose, assuming sales are expected to be 650 pillows?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Q1: Query Company sells pillows
for $75.00 each. The manufacturing
cost, all variable, is $8 per pillow. The
company is planning on renting an
exhibition booth for both display and
selling purposes at the annual crafts
and art convention. The convention
coordinator allows three options for
each participating company. They are:
1. paying a fixed booth fee of $3,210, or
2. paying an $2,000 fee plus 8% of revenue
made at the convention, or
3. paying 15% of revenue made at the
convention.
Required:
a. Compute the breakeven sales in pillows of
each option.
b. Which option should Query Company choose,
assuming sales are expected to be 650 pillows?
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