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What would be the indifferent point

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Reference no: EM13913302

Tasty Treats plans to open a new retail store in Medina, Ohio. Tasty Treats will sell specializing cupcakes for $5 per cup cake.(Each cupcake has a variable cost of $2). The company is negotiating its least for the new Medina location. The landlord has offered two leasing options,1) lease of $2500 per month, or 2) A monthly lease cost of $900 plus 10% of the company monthly sales revenue.

Requirements:

1. If Tasty Treats plans to sell 2400 cupcakes a month, which lease option would cost each month? Why?

2. If the company plans to sell 4,400 cupcakes a month, which lease option would be more attractive? Why?

Beginning calculating the indifferent point.

VCU (option1)x units +FC (option 1) = VCU (option 2) x units + FC (option 1)

What would be the indifferent point?

Reference no: EM13913302

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