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Need requirement 2 completed, and requirement 3! The Candle Factory plans to open a new retail store in Portland, Maine. The store will sell specialty
Need requirement 2 completed, and requirement 3!
The Candle Factory plans to open a new retail store in Portland, Maine. The store will sell specialty candles for an average of $40 each. The average variable costs per candle are as follows: Wax $7 Other additives $3 Base $1 The company is negotiating its lease for the new location. The landlord has offered two leasing options: Option A) a lease of $2,800 per month; or Option B) a monthly lease cost of $1.000 plus 15% of the company's monthly sales revenue. The company expects to sell approximately 200 candles per month. Read the requirements. The lease option that is more attractive for the company under its current sales expectations is option B, the fixed lease payment plus sales based commission because it results in the lowest total lease costs. Requirement 2. At what level of sales (in units) would the corripany be indifferent between the two lease options? Show your proof. Requirements Begin by selecting the equation to determine the indifference point. (Abbreviations used" FC = Fixed costs, VCU = Variable costs per unit) (VCU (option A) x Units) + FC (option A) = (VCU (option B) x Units) + FC (option B) The indifference point is 300 candles. Show your proof. (Consider only the fixed and variable costs related to the lease options. Complete all input cells. Enter a "0" for zero balances.) Option A Option B 1. Which lease option is more attractive for the company under its current sales expectations? Calculate the total lease cost under. Option A Option B 2. At what level of sales (in units) would the company be indifferent between the two lease options? Show your proof. 3. If the company's expected sales were 600 candles instead of the projection listed in the exercise, which lease options would be more favorable for the company? Why? 2,800 $ Total fixed expenses Tolal variable expenses 1,000 3000 2,800 4000 Total lease costs Choose from any list or enter any number in the input fields and then click Check Answer. Print Done 1 part I remaining Clear All Final Check Final ChookStep by Step Solution
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