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:

Outcome Research

The study of the results or outcomes of specific health care practices and interventions.

Controlled Research

Studies designed with control groups and other measures to test the efficacy of interventions in a systematic and scientific manner.

Meta-analytic Studies

Research methodologies that statistically combine results from multiple studies to derive conclusions about a topic or effect size.

Traditional Psychoanalysis

A therapeutic technique developed by Freud, focusing on exploring unconscious conflicts driving behavior, primarily through free association and dream analysis.