Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Maritime Art Company sells prints of nature scenes in Nova Scotia, New Brunswick and Prince Edward Island. They sell all of their prints for $49.00
Maritime Art Company sells prints of nature scenes in Nova Scotia, New Brunswick and Prince Edward Island. They sell all of their prints for $49.00 each. The manufacturing cost, which is all variable, is $16.33 per print. The company plans on renting an exhibition booth at the annual arts and crafts convention taking place the last weekend of October in Moncton, New Brunswick. The convention coordinator has offered the following exhibition booth rental options to each participating company: paying a fixed booth fee of $5,900, or; paying a $3,900 fee plus 16.67% of revenue made at the convention Required: 1. Compute the break-even sales in prints of each option. 2. Assuming, based on prior years' experience at this convention, Maritime Art expects to sell 375 prints. Which option should the company choose? Calculate Maritime Art's Profit based on the best option. 3. Assume Maritime Art chooses the fixed booth fee of $5,900. What is Maritime Art's Margin of Safety at 375 prints, calculated as a percentage? What does this measure mean? 4. Assume Maritime Art chooses the fixed booth fee of $5,900. What is Maritime Art's Degree of Operating Leverage at sales of 375 prints? How can this measure be used
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started