Question

You lease a storeroom on a percentage basis. The lease calls for a minimum rental of $300 per month and 5% of the gross annual sales over $80,000. How much is the annual rent with a gross annual business of $150,000?

Answer 1

The annual rent is $7100

Step-by-step explanation:

The question says that $300 per month would be charged regardless of the level of sales. So the annual minimum rent is:

Annual minimum rent = $300 per month * 12months = $3600 per year

Now

The annual rent on over $80,000 sales would be the 5% of the difference between annual sales $150,000 minus $80,000:

Annual rent on Sales over $800,000 = 5% * ($150,000 - $80,000) = $3500

Now

T. Annual Rent = Annual minimum rent + Percentage of sales over $80,000

Total Annual Rent = $3,600 + $3,500 = $7,100 Annual Rent