1. Which lease option is more attractive for the company under its current sales expectations? Calculate the total lease cost under: Option A Option B 2. At what level of sales in units) would the company be indifferent between the two lease options? Show your proof. 3. If the company's expected sales were 790 candles instead of the projection listed in the exercise, which lease options would be more favorable for the company? Why? Print Done Wax Art plans to open a new retail store in Eastport, Maine. The store will sell specialty candles for an average of $45 each. The average variable costs per candle are as follows: Wax $10 Other additives $4 Base $2 The company is negotiating its lease for the new location. The landlord has offered two leasing options: Option A) a lease of $3,600 per month; or Option B) a monthly lease cost of $990 plus 20% of the company's monthly sales revenue. The company expects to sell approximately 240 candles per month Read the equirements Requirement 1. Which lease option is more attractive for the company under its current sales expectations? Calculate the total lease cost under Option A and Option B. Begin by identifying the formula to calculate the total costs. Total lease costs + (Consider only the fixed and variable costs related to the lease options.) The total lease cost under Option Ais (Consider only the fixed and variable costs related to the lease options.) The total lease cost under Option is N Which lease option is more attractive for the company under its current sales expectations? The lease option that is more attractive for the company under its current sales expectations is because it Requirement 2. At what level of sales (in units) would the company be indifferent between the two lease options? Show your proof Begin by selecting the equation to determine the indifference point. (Abbreviations used" FC = Fixed costs, VCU = Variable costs per unit) total lease cost under Option A and Option B. Begin by identifying the formula to calculate the total costs. + Total lease costs (CC lated to the lease options.) Contribution margin per unit Th Contribution margin ratio Sales revenue (Total fixed expenses (lease) lated to the lease options.) Total variable expenses (lease) Th Units sold Which lease option is more attractive for the company under its current sales expectations? The lease option that is more attractive for the company under its current sales expectations is because it by Requirement 2. At what level of sales (in units) would the company be indifferent between the two lease options? Show your proof. Begin by selecting the equation to determine the indifference point. (Abbreviations used" FC = Fixed costs, VCU - Variable costs per unit) Choose from any list or enter any number in the input fields and then continue to the next question. O Type here to search RI w . Wax Art plans to open a new retail store in Eastport, Maine. The company is negotiating its lease for the new locatic The store will sell specialty candles for an average of $45 The landlord has offered two leasing options: each. The average variable costs per candle are as follows: Option A) a lease of $3,600 per month: or Wax $10 Option B) a monthly lease cost of $990 plus 20% o Other additives $4 company's monthly sales revenue. Base $2 The company expects to sell approximately 240 candles month Read the requirements. www Requirement 2. At what level of sales (in units) would the company be indifferent between the two lease options? Show your proof. Begin by selecting the equation to determine the indifference point. (Abbreviations used" FC = Fixed costs, VCU = Variable costs per unit) The indifference point is candles. Show your proof. (Consider only the fixed and variable costs related to the lease options. Complete all input cells. Enter a "O" for zero balances.) Option A Option B Total lease costs Requirement 3. If the company's expected sales were 790 candles instead of the projection listed in the exercise, which lease options would be more favorable for the company? Why? The lease option that is more attractive for the company if the company plans to sell 790 candles a month is because the Choose from any list or enter any number in the input fields and then continue to the next question. wQULOV Requirement 2. At what level of sales in units) would the company be indifferent between the two lease options? your proof. Begin by selecting the equation to determine the indifference point. (Abbreviations used" FC = Fixed costs, VCU = Variable costs per unit) hogy FC (option A) = FC (option B) (VCU (option A) x Units) = (VCU (option B) x Units) (VCU (option A)x Units) + FC (option A) = (VCU (option B) x Units) + FC (option B) (VCU (option A) x Units) + FC (option A) = FC (option B) Total lease costs Show your proof. (Consider only the fixed and variable costs related to t "0" for zero balances.) Option A O Shiny Contribution margin per unit Sales revenue Total contribution margin Total fixed expenses Total variable expenses Variable cost per unit vected sales were 790 candles instea e for the company? Why? le for the company if the company pla because Choose from any list or enter any number in the input fields and then cc
