Query Company Sells Pillows for $25

question 114

Essay

Query 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.They are:
1.paying a fixed booth fee of $5,010, or;
2.paying an $4,000 fee plus 10% of revenue made at the convention, or;
3.paying 20% of revenue made at the convention.Required:
a.Compute the break-even sales in pillows of each option.
b.Which option should Query 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.

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Definitions:

Ganglion Cells

Neurons located in the retina that receive visual information from photoreceptors via intermediate bipolar cells and transmit it to the brain.

Thalamus

A brain structure that acts as a relay station for sensory and motor signals to the cerebral cortex.

Neurons

Specialized cells transmitting nerve impulses; the basic building blocks of the nervous system.

Color Blindness

A visual impairment where an individual has difficulty distinguishing between certain colors, often red and green.