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Doug Litwiller is interested in renting space from D&T Associates for a food service business. D&T Associates has provided three alternatives as follows:
1. $2,000 fixed rent per month
2. $1,000 fixed rent per month plus 2 percent of sales
3. $1,500 fixed rent per month plus 4 percent of monthly sales in excess of $37,500
Required:
1. Determine the indifference point
2. Graph the three alternative using Exhibit 11 as guide.
3. If the average monthly sales are forecast to be $80,000, what will the total lease cost be under each alternative and which do you recommend?
question 1the following information appears in tots toy factory records for the year ended december 31
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