The Varsity Club Sells Souvenir Items at University Sporting Events

question 33

Essay

The Varsity Club sells souvenir items at university sporting events for $24 each.The souvenir items cost $16 each.The club is negotiating with the university administration to sell the items in a kiosk in the university student center.Three rental arrangements are under consideration:
Option 1: Pay rent of $2,000
Option 2: Pay rent of $1,200 plus 10% of revenue
Option 3: Pay the university 25% of revenue
The club estimates that it will be able to sell 300 souvenir items during the period.
Required:
1)Compute the break-even point in units for each of the three options.
2)Assuming the club reaches its sales target,which option should be chosen?

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Definitions:

Diverse Characteristics

Refers to the variety of distinct attributes, qualities, or elements that individuals or groups possess, highlighting differences in culture, perspective, or physical traits.

Self-control Problems

Difficulties in regulating one’s behavior, emotions, or thoughts, often leading to impulsive actions.

Immediate Consequences

The instant results or outcomes that follow a specific action or decision.

Long-term Consequences

The enduring effects or outcomes that result from actions, conditions, or decisions over a prolonged period.