Hi john,Bronty co is considering whether to undertake some contract work for a customer. A special cutting machine will have to be hired for three months for the work(the length of the contract). Hire charges for this machine are $75 per month, with a minimum hire charge of $300.
my question is why only $300 minimum hire charge is relevant in the answer (BPP Study Kit.)
Thanks
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10y ago#1'Minimum hire charge' means that this is the smallest that they will have to pay.
If they were hiring for 12 months, then they would have to pay 12 x 75 = $900
If there was no minimum charge then for 3 months they would pay 3 x 75 = $225.
However, the minimum charge means that they will always have to pay at least $300.
So since they are hiring for 3 months they will be charged $300 (and not $225).
thanks for the prompt response, I took the minimum charge before as a fixed charge in addition to normal monthly charge. my doubt is now cleared. thanks
10y ago#3That is great, and you are welcome :-)
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