Question
Mr. Buster wants to open a new vacuum store called the Pick-up in a nearby plaza. Mr. Buster will be selling vacuums for $140 each.
Mr. Buster wants to open a new vacuum store called the Pick-up in a nearby plaza. Mr. Buster will be selling vacuums for $140 each. Variable costs (not including the leasing costs below) are $50 for every vacuum.
In terms of lease payments, the plaza has provided him three options: i. Pay $22 per vacuum sold ii. $24,000 per month iii. $16,000 per month and $15 per vacuum sold Do not enter dollar signs or commas in the input boxes. Use the negative sign for negative values. Round all answers to the nearest whole number. a) Calculate the monthly operating income for each of the three options if 240 units are sold and if 610 units are sold.
| Lease Option | Operating Income Based on the Number of Vacuums Sold | |
| 240 units | 610 units | |
| i. Pay $22 per vacuum sold | $Answer | $Answer |
| ii. $24,000 per month | $Answer | $Answer |
| iii. $16,000 per month and $15 per vacuum sold | $Answer | $Answer |
b) At a production level of 610 units, which option should be recommended? Option: Answeriiiiii c) Calculate the degree of operating leverage for the second lease option if Mr. Buster sells 610 vacuums. Round your answer to 2 decimal places. Degree of Operating Leverage: Answer
Mr. Buster wants to open a new vacuum store called the Pick-up in a nearby plaza. Mr. Buster will be selling vacuums for $140 each. Variable costs (not including the leasing costs below) are $50 for every vacuum.
In terms of lease payments, the plaza has provided him three options: i. Pay $22 per vacuum sold ii. $24,000 per month iii. $16,000 per month and $15 per vacuum sold Do not enter dollar signs or commas in the input boxes. Use the negative sign for negative values. Round all answers to the nearest whole number. a) Calculate the monthly operating income for each of the three options if 240 units are sold and if 610 units are sold.
| Lease Option | Operating Income Based on the Number of Vacuums Sold | |
| 240 units | 610 units | |
| i. Pay $22 per vacuum sold | $Answer | $Answer |
| ii. $24,000 per month | $Answer | $Answer |
| iii. $16,000 per month and $15 per vacuum sold | $Answer | $Answer |
b) At a production level of 610 units, which option should be recommended? Option: Answeriiiiii c) Calculate the degree of operating leverage for the second lease option if Mr. Buster sells 610 vacuums. Round your answer to 2 decimal places. Degree of Operating Leverage: Answer
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Canadian Income Taxation Planning And Decision Making
Authors: Joan Kitunen, William Buckwold
17th Edition 2014-2015 Version
1259094332, 978-1259094330
