question archive Marshel Company sells pillows for $25
Marshel Company sells pillows for $25
Subject:AccountingPrice: Bought3
Marshel 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 at the annual crafts and art convention. The convention coordinator allows three options for each participating company. The options are: 1. paying a fixed booth fee of $5,010, or; 2. paying a $4,000 fee plus 10% of revenue made at the convention, or; 3. paying 20% of revenue made at the convention. Required: (15 marks) a. Compute the break-even sales in pillows for each option. b. Which option should Marshel Company choose, assuming sales are expected to be 800 pillows? c. Calculate the margin of safety for Option 1 if sales are expected to be 300 pillows.
