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Business, 03.12.2021 22:10 itsmaddierae11
Problem information: Puffy Pillow Company sells pillows for $25.00 each. The manufacturing cost, all variable, is $10 per pillow. The company is planning on renting an exhibition booth for both display and selling purposes at the annual crafts and art convention. The convention coordinator allows three rental options for each participating company. They are: Option 1. paying a fixed booth fee of $5,010 a month, or Option 2. paying an $4,000 fee plus 10% of revenue made at the convention, or Option 3. paying 20% of revenue made at the convention. Required: 1. Calculate the contribution margin per unit for each of the three options. 2. Compute the breakeven sales (dollars and units) and the monthly rent at break-even for each of the three options. 3. Calculate the degree of operating leverage at sale of 350 units for each of the three rental options. 4. At what level of revenues will Puffy Pillow Company earn the same operating income under option 1 and option 2
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Problem information: Puffy Pillow Company sells pillows for $25.00 each. The manufacturing cost, all...
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