Jassim operates retail stores in several shopping malls. The average selling price of an arrangement is $30 and the average cost of each sale is $18. A new mall is opening where Jassim wants to locate a store, but the location manager is not sure about the rent method to accept. The mall operator offers the following three options for its retail store rentals:

1. paying a fixed rent of $15,000 a month, or

2. paying a base rent of $9,000 plus 10% of revenue received, or

3. paying a base rent of $4,800 plus 20% of revenue received up to a maximum rent of $25,000.

Required:

a. For each option, compute the breakeven sales and the monthly rent paid at break-even.

b. Beginning at zero sales, show the sales levels at which each option is preferable up to 5,000 units.