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Mr. Pickerupper wants to open a new vacuum store called the Pick-up in a nearby plaza. Mr. Pickerupper will be selling vacuums for $120 each.
Mr. Pickerupper wants to open a new vacuum store called the Pick-up in a nearby plaza. Mr. Pickerupper will be selling vacuums for $120 each. Variable costs (not including the leasing costs below) are $100 for every vacuum. In terms of lease payments, the plaza has provided him three options: 1. Pay $38 per vacuum sold ii. $20,000 per month iii. $17,000 per month and $7 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 250 units are sold and if 580 units are sold. Lease Option Operating Income Based on the Number of Vacuums Sold 250 units 580 units i. Pay $38 per vacuum sold ii. $20,000 per month $ III. $17,000 per month and $7 per vacuum sold b) At a production level of 580 units, which option should be recommended? Option: c) Calculate the degree of operating leverage for the second lease option if Mr. Pickerupper sells 580 vacuums. Round your answer to 2 decimal places. Degree of Operating Leverage
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