Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please help - Amy is opening a snowboard rental store. She will rent snowboards to customers for skiing on a weekly basis for $75 per
please help
- Amy is opening a snowboard rental store. She will rent snowboards to customers for skiing on a weekly basis for $75 per week including the boots. The skiing season is 20 weeks long. Amy can buy a set of snowboard and boots for $550, rent them to customers for a season, and sell them for $250 at the end of the season. The store rent is $7,200 per year. During the off-season, Amy will sublet the store for $1,600. Salaries, advertising and office expenses are $26,000 per year. After each rental, the boards must be resurfaced and the boots cleaned and deodorized. Labor (not included in the $26,000) and materials to prepare the board and boots to be re-rented cost $7 per rental. a. Amy is trying to determine the minimum number of boards to purchase. She expects to rent 80% of the boards in any given week. Determine Amy's total fixed costs for the year, and the contribution margin per board per year. Using this information, how many boards must Amy purchase in order to break even? (do not round). b. Suppose that Amy purchased 50 boards. What profit should she expect, assuming that she expects to rent 80% of the boards in any given week? c. Suppose Amy purchased 50 boards. What percentage of the boards must she rent each week to break even (including covering the costs of the boards)? Is the percentage you calculated different from the expected rental rate of 80% in parts "a" and "b"? Briefly explain 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