Armidale Corporation Watch (ACW) sells smart TVs. Each TV unit sells for $250. ACW, when efficiently utilizing its manufacturing capacity, can manufacture one unit of smart TV at a per unit variable costs (VC) of $100 (all variable). Alison, Operations Manager at ACW, is planning to have a display-cum-sale stall on rent at the 2022 Sussex Street Show Grounds (SSSG). The SSSG Sales Manager was approached by Alison who offered her the following different rent options to choose from:

1. Zero dollars variable commission on sales; a fixed charge of $5,010, OR

2. A commission of 10% on all sales ACW makes; plus, a fixed rental component, irrespective of sales, of $4,000, OR

3. A commission of 20% on all sales ACW makes; and, zero dollars fixed rental component.

Required:

a. Going by the information provided in the question, what is the breakeven (BE) sales in number of TV sets under each of the three rental options Alison is considering to choose from? (9 marks - 3 marks each option)

b. Which of the three rental options should Alison choose for her company with an aim to maximize the companys profits, if she is expecting a total sale of 800 TV sets at the SSSG? (4 marks)