Amy Laura is opening a snowboard rental store. She rents snowboards for skiing on a weekly basis for $75 per week including the boots. The skiing season is 20 weeks long. Laura can buy a snowboard and boots for $550.00, rent them for a season, and sell them for $250.00 at the end of the season. The store rent is $7,200 per year. During the off-season, Laura sublets the store for $1,600. Salaries, advertising, and office expenses are $26,000 per year. On average, 80 percent of the boards in any given week are rented. After each rental, the boards must be resurfaced and the boots deodorized. Labor (not included in the $26,000) and materials to prepare the board and boots to be re-rented cost $7.00.

How many boards must Laura Purchase in order to break even?


Suppose that Laura purchases 50 boards. What profit does she expect?

Laura purchases 50 boards. What fraction of her boards must she rent each week to break even (including covering the cost of the boards)?

Explain why the percentage utilization you calculated in part (c) differs from the expected rental rate of 80 percent.

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Originally Posted by laynaymya

Amy Laura is opening a snowboard rental store. She rents snowboards for skiing on a weekly basis for $75 per week including the boots. The skiing season is 20 weeks long. Laura can buy a snowboard and boots for $550.00, rent them for a season, and sell them for $250.00 at the end of the season. The store rent is $7,200 per year. During the off-season, Laura sublets the store for $1,600. Salaries, advertising, and office expenses are $26,000 per year. On average, 80 percent of the boards in any given week are rented. After each rental, the boards must be resurfaced and the boots deodorized. Labor (not included in the $26,000) and materials to prepare the board and boots to be re-rented cost $7.00.

How many boards must Laura Purchase in order to break even?


Suppose that Laura purchases 50 boards. What profit does she expect?



Laura purchases 50 boards. What fraction of her boards must she rent each week to break even (including covering the cost of the boards)?

Explain why the percentage utilization you calculated in part (c) differs from the expected rental rate of 80 percent.

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there is a methodology for determinimg these answers it is given by a * b = c and
Breakeven Point = Fixed Costs/(Unit Selling Price - Variable Costs) when you have done the calculations ask the questions

I'm still lost can you help me with the first questions

Sales = 75*20*.8

Variable cost = $7*20*.8 + 550-250

Fixed cost = 7200-1600 + 26000

now you have as much information as I have and it all existed in the question. Apply the formula

I'm going to go out on a limb and say this. In my experience students don't need to apply these principles until they have some experience. Accounting is not rocket science it is logic and mathematics applied to a body of knowledge and that knowledge is gained by diligent study