Carmel Rugs is holding a $2-$week carpet sale at Jackie's Club, a local warehouse store. Carmel Rugs plans to sell carpets for $$950$ each. The company will purchase the carpets from a local distributor for $$760$ each, with the privilege of returning any unsold units for a full refund. Jackie's Club has offered Carmel Rugs two payment alternatives for the use of space.

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Read the requirements.

Requirement $1.$ Calcul

Begin by determining th

Number of units to b

Requirements

Calculate the breakeven point in units for $($a$)$ option $1$ and $($b$)$ option $2.$

At what level of revenues will Carmel Rugs earn the same operating income under either option?

a$.$ For what range of unit sales will Carmel Rugs prefer Option $1?$

b$.$ For what range of unit sales will Carmel Rugs prefer Option $2?$

Calculate the degree of operating leverage at sales of $65$ units for the two rental options.

Briefly explain and interpret your answer to requirement $3.$