Question
Zoe's Fresh Flowers is new business ready to open a store in the Westfield shopping centre nearby. Westfield has a number of florist shops already,
Zoe's Fresh Flowers is new business ready to open a store in the Westfield shopping centre nearby. Westfield has a number of florist shops already, so Zoe is anxious about the demand for her flower arrangements. Westfield has two options available for rental contracts: a) A standard fixed rent agreement of $17,500 per month; or b) A commission contract based on 21% of sales revenue with $7,500 per month minimum rent. Zoe estimates that a bouquet will sell for $125 and have a variable cost of $72 to make and a 11% sales commission for the shop attendant. Required: 1. What is the break-even point in units under each rental agreement?
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