Chris Muss Is Going to Sell Ad-Hoc Compact Disks for $40

Chris Muss is going to sell Ad-hoc compact disks for $40 a box; one box is considered to be one unit. The disks cost Chris $10 a unit. She is planning to rent a booth at the up-coming Area Computer Show. She has three options for attending the show: 1. paying a fixed fee of $3,000;
2) paying a $1,000 fee plus 10% of her revenue made at the convention, or;
3) paying 25% of her revenue made at the convention.
Which of the following statements is true?

A) CVP analysis can show that the risks are identical in each case.
B) The break-even point is the identical in each case.
C) One of the options will allow Chris Muss to break-even, even if she doesn't sell any disks, assuming she can return any unsold disks for a full refund.
D) Fixed costs are inherent in all of the options.
E) Operating income per unit is the same in each case, as both selling price and costs are the same.

Correct Answer:

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