Eat N Eat shop operates sandwiches on the go in shopping malls. The average selling price of a sandwich is P100. The average cost of each sandwich is P60. A new mall is opening where the company wants to locate a shop but the location manager is not sure about the rent metho to accept. The mall operator offers two options for shop rentals as follow [1] paying a base rent of P40,000 plus 8% of revenue received, or [2] paying a base rent of P20,000 plus 20% of revenue received up to a maximum of P80,000. Eat N Eat will be indifferent between options 1 and 2 when its level of sales is:

Eat N Eat shop operates sandwiches on the go in shopping malls. The average selling price of a sandwich is P100. The average cost of each sandwich is P60. A new mall is opening where the company wants to locate a shop but the location manager is not sure about the rent metho to accept. The mall operator offers two options for shop rentals as follow [1] paying a base rent of P40,000 plus 8% of revenue received, or [2] paying a base rent of P20,000 plus 20% of revenue received up to a maximum of P80,000. Eat N Eat will be indifferent between options 1 and 2 when its level of sales is:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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