Carmel Rugs is holding a 2-week carpet sale at Jacob's Club, a local warehouse store. Carmel Rugs plans to sell carpets for $550 each. The company will purchase the carpets from a local distributor for $440 each, with the privilege of returning any unsold units for a full refund. Jacob's Club has offered Carmel Rugs two payment alternatives for the use of space (Click the icon to view the additional information.) Read the requirements Requiemen 1. Calculate ure uitaneven point is ful (a) Uput 1 aru (u) pu Begin by determining the formula to calculate the breakeven point in units Number of units to breakeven Fixed cost Contribution margin per unit Calculate the breakeven point in units for option 1, then option 2. (Round your answers up to the nearest whole number. Enter "O" for zero balances.) (a) Option 1 (b) Option 2 Units 33 0 Requirement 2. At what level of revenues will Carmel Rugs eam the same operating income under either option? a. For what range of unit sales will Carmel Rugs prefer option 12 b. For what range of unit sales will Carmel Rugs prefer option 2? 4 Begin by determining the formula to calculate the operating income where each option is equal (Abbreviation used FC - Fixed costs, SP Selling price, VC Variable costs, Q = Quantity of units sold.) Option 1 Option 2 SP Q) (VC Q) FC = SP Q) (VC xa) FC Now calculate the level of revenues It will take units to generate the same operating income under either option. The level of revenues under either option using these units equal Requirements 1. Calculate the breakeven point in units for (a) option 1 and (b) option 2. 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? 3. Calculate the degree of operating leverage at sales of 55 units for the two rental options. 4. Briefly explain and interpret your answer to requirement 3. Print Done Read the requirements. More info Option 1: A fixed payment of $3,630 for the sale period Option 2: 10% of total revenues earned during the sale period Assume Carmel Rugs will incur no other costs. Print Done