Cofiee Rugs is holfing a 2-week carpet sale at Jean's Club, a bcal warehouse store. Coffee Rugs plans to sell carpets for $500 each. The company will purchase the carpets from a local distributor for $350 each, with the priviege of returning any unsold units for a full refund Jean's Club has ofiered Coffee Rugs two payment alternatives for the use of space. D (Click the icon to view the addaional information) Read the requirements. Requireenent 1. Calculate the breakeven point in units for (a) Option 1 and (b) Option 2. Begin by determining the formula to calculate the breakeven point in units. Number of units to breakeven = Focod cost Calculate the breakeven point in units for option 1, thon option 2. (Round your answers up to the nearest whole number Enter "0" for zere balances.) Reguirement 2. At what level of revenues will Collee Rugs eain the same operating income under either option? a. For what range of unit salos will Coffee Rugs prefer option 1 ? b. For what range of unit sales will Collee Rugs prefer option 2 ? Begin by defermining the formula ta calculate the operating income whece each option is equal (Abbreviation used: FC = Fixed costs, SP = Selling prico, VC = Varbile costs, 9 = Quantily of units bold) Now calculate the level of iovenues Hi wil take unts to generate the sanue operating incono under ether opton. The lovel of revenues under either option Requirements 1. Calculate the breakeven point in units for (a) option 1 and (b) option 2. 2. At what level of revenues will Coffee Rugs earn the same operating income under either option? a. For what range of unit sales will Coffee Rugs prefer Option 1? b. For what range of unit sales will Coffee Rugs prefer Option 2? 3. Calculate the degree of operating leverage at sales of 102 units for the two rental options. 4. Briefly explain and interpret your answer to requirement 3 . Cofiee Rugs is holfing a 2-week carpet sale at Jean's Club, a bcal warehouse store. Coffee Rugs plans to sell carpets for $500 each. The company will purchase the carpets from a local distributor for $350 each, with the priviege of returning any unsold units for a full refund Jean's Club has ofiered Coffee Rugs two payment alternatives for the use of space. D (Click the icon to view the addaional information) Read the requirements. Requireenent 1. Calculate the breakeven point in units for (a) Option 1 and (b) Option 2. Begin by determining the formula to calculate the breakeven point in units. Number of units to breakeven = Focod cost Calculate the breakeven point in units for option 1, thon option 2. (Round your answers up to the nearest whole number Enter "0" for zere balances.) Reguirement 2. At what level of revenues will Collee Rugs eain the same operating income under either option? a. For what range of unit salos will Coffee Rugs prefer option 1 ? b. For what range of unit sales will Collee Rugs prefer option 2 ? Begin by defermining the formula ta calculate the operating income whece each option is equal (Abbreviation used: FC = Fixed costs, SP = Selling prico, VC = Varbile costs, 9 = Quantily of units bold) Now calculate the level of iovenues Hi wil take unts to generate the sanue operating incono under ether opton. The lovel of revenues under either option Requirements 1. Calculate the breakeven point in units for (a) option 1 and (b) option 2. 2. At what level of revenues will Coffee Rugs earn the same operating income under either option? a. For what range of unit sales will Coffee Rugs prefer Option 1? b. For what range of unit sales will Coffee Rugs prefer Option 2? 3. Calculate the degree of operating leverage at sales of 102 units for the two rental options. 4. Briefly explain and interpret your answer to requirement 3
