A Company sells TV sets. Sale price per unit is $250 each. The company’s cost to manufacture a TV set is $100 (all variable). Ali, the manager, wishes to rent a display and sale stall at the Armidale Show 2016. The Armidale Show organizer gives the following choices for rent to Ali:
1. A fixed stall charge of $5,010, or
2. A fixed stall charge of $4,000 plus 10% of all sales made at the Show, or
3. 20% of all sales made at the Show, with no fixed charge.
Required: a. Compute the breakeven sales in number of TV sets of each option. b. Which option should Ali choose, assuming sales are expected to be 800 TV sets? Hint: For ‘a’ (all options), denote the number of units required by a letter (say, M, N or O).