You are the advisor of a Teal Achievement group in a local high school. You need to help the group make a decision about fees that must be paid to sell gardening tools at the Home and Garden Show. The group sells a set of tools for $32. The manufacturing cost (all variable) is $10 per set. The Home and Garden Show coordinator allows the following three payment options for groups exhibiting and selling at the show:

1. Pay a fixed booth fee of $8,960.
2. Pay a fee of $6,080 plus 10% of all revenue from tool sets sold at the show.
3. Pay 15% of all revenue from tool sets sold at the show.

Compute the breakeven number of tool sets for each option. (Round intermediate calculations to 2 decimal places, e.g. 15.25 and final answer to 0 decimal places, e.g. 125. If an answer is zero, please enter 0. Do not leave any fields blank.)

Option 1:		sets
Option 2:		sets
Option 3:		sets

Which payment plan has the highest degree of operating leverage?

Payment plan

Option 1Option 2Option 3

Which payment plan has the lowest risk of loss for the organization?

Payment plan

Option 2Option 3Option 1

At what level of revenue should the group be indifferent to options 1 and 2?

Indifference revenue level

$

Which option should Teal Achievement choose, assuming that sales are expected to be 1,600 sets of tools? (Round intermediate calculations to 2 decimal places, e.g. 15.25 and final answer to 0 decimal places, e.g. 125.)

Option 1 profit:		$
Option 2 profit:		$
Option 3 profit:		$

Teal Achievement should choose payment plan: