Question
ABC Company makes and sells flower bouqets. The company is considering opening a new store in the mall. The mall has several empty shops and
ABC Company makes and sells flower bouqets. The company is considering opening a new store in the mall. The mall has several empty shops and BC Company is unsure of the demand for its product. The mall has offered ABC Company two alternative rental agreements. The first is a standard fixed rental agreement whereby ABC Company will pay the mall $5,000 per month. The second is a royalty agreement where the mall receives $20 for each bouquet sold. Each bouquet sells for $60 and has a $30 variable cost to make.
Calculate the smallest number of bouquets that ABC Company must sell that would make the company prefer the standard fixed rental agreement over the royalty agreement.
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