Stella has to choose between a fixed monthly rent of $2,800 or to pay a variable monthly rent of 8% of sales revenue. She anticipates her sales to average $525,000 per year.

a.What is the indifference point on an annual sales revenue basis?

b.What options should she choose?

Use the High-Low method and the information below to answer the following questions.

Room costRooms Sold

Busiest40802800

Slowest31001400

a.What is the average variable cost per room?

b.What is the total variable cost for the busiest and the slowest month?

c.What is the total fixed cost for the busiest and the slowest month?