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Rugs is holding a? 2-week carpet sale at

Jacob'sJacob's

?Club, a local warehouse store.

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Rugs plans to sell carpets for

$ 1 comma 000$1,000

each. The company will purchase the carpets from a local distributor for

$ 400$400

?each, with the privilege of returning any unsold units for a full refund.

Jacob'sJacob's

Club has offered

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Rugs two payment alternatives for the use of space.

times

Option? 1: A fixed payment of

$ 17 comma 400$17,400

for the sale period

times

Option? 2:

2020?%

of total revenues earned during the sale periodAssume

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Rugs will incur no other costs.Read the requirements

.	Calculate the breakeven point in units for? (a) option 1 and? (b) option 2.
2.	At what level of revenues will ColorColor Rugs earn the same operating income under either? option?
	a. For what range of unit sales will ColorColor Rugs prefer option? 1?
	b. For what range of unit sales will ColorColor Rugs prefer option? 2?
3.	Calculate the degree of operating leverage at sales of 8787 units for the two rental options.
4.	Briefly explain and interpret your answer to requirement 3.

.

Requirement 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

?=

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? "0" for zero? balances.)

	Units
(a) Option 1
(b) Option 2