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The Cupcake World Factory plans to open a new retail store in Medina, Ohio. The store will sell specialty cupcakes for $6 per cupcake (each
The Cupcake World Factory plans to open a new retail store in Medina, Ohio. The store will sell specialty cupcakes for $6 per cupcake (each cupcake has a variable cost of $3.) The company is negotiating its lease for the new store. The landlord has offered two leasing options: 1) a lease of S2.000 per month, or 2) a monthly lease cost of $800 plus 5% of the company's monthly sales revenue. Requirements 1. 2. If the Cupcake World Factory plans to sell 3,200 cupcakes a month, which lease option would cost less each month? Why? If the company plans to sell 6,000 cupcakes a month, which lease option would be more attractive? Why? Requirement 1. If the Cupcake World Factory plans to sell 3,200 cupcakes a month, which lease option would cost less each month? Why? Begin by calculating the indifference point. Select the equation to determine the indifference point. (Abbreviations used: FC Fixed costs, VCU Variable costs per unit) (VCU (option 1) x Units)FC (option 1)(VCU (option 2) x Units) + FC (option 2) The indifference point iscupcakes
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