Answer the Following Question(s)using the Information Below

Answer the following question(s) using the information below.
Southwestern College is planning to hold a fund raising banquet at one of the local country clubs.It has two options for the banquet:
Southwestern College has budgeted $1,800 for administrative and marketing expenses.It plans to hire a band which will cost another $800.Tickets are expected to be $30 per person.Local business supporters will donate any other items required for the event.
-Mrs.Tisdale is going to sell Christmas tree lights for $40 a box.The lights cost Mrs.Tisdale $10 a box and any unsold lights can be returned for a full refund.She is planning to rent a booth at the upcoming Happy Holidays Convention,which offers three options:
1.paying a fixed fee of $3,000,or
2.paying a $1,000 fee plus 10% of revenues made at the convention,or
3.paying 25% of revenues made at the convention.
Which of the following statements is FALSE?

A) Her decision will determine the risk she faces.
B) Contribution margin will vary depending upon the option chosen.
C) One of the options will allow Mrs.Tisdale to break even,even if she doesn't sell any lights.
D) Operating income will always be the greatest for Option 3.
E) Option 3 has the lowest operating leverage.

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free