Use the Information for the Question(s)below

question 82

Essay

Use the information for the question(s)below.
Your firm is preparing to open a new retail strip mall and you have multiple businesses that would like to lease space in it.Each business will pay a fixed amount of rent each month plus a percentage of the gross sales generated each month.The cash flows from each of the businesses have approximately the same amount of risk.The business names,square footage requirements,and monthly expected cash flows for each of the businesses that would like to lease space in your strip mall are provided below:
-If your new strip mall will have 15,000 square feet of retail space available to be leased,to which businesses should you lease and why?

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Definitions:

Direct Labor Standards

Direct Labor Standards define the expected labor time and cost necessary to produce a unit of product, facilitating budgeting and performance evaluation.

Work in Process

Inventory category that includes items currently being manufactured but not yet completed.

Standard Cost System

A standard cost system is an accounting method that uses cost estimates to predict the cost of production under normal conditions.

Direct Materials

Raw materials that are directly traceable to the finished product.