The Allentown Corporation is a retail seller of sofas in Ontario. The CEO has set a profit target of $15,000 per month. Currently the price per sofa is $400 and average variable cost is $150. Allentown's monthly fixed costs are $4000 per month. a) How many sofas does Allentown have to sell per month to make the CEO's profit target? What is average total cost when the firm is making the profit target? b) A large department store chain located in New York State (where you currently have no retail stores) has made an offer to purchase 100 sofas per month from you at a discounted price of $300 per sofa. In order to sign this contract while continuing to sell sofas in in Ontario, Allentown must expand its production facilities and invest in machinery and tools. The expansion will mean an additional $10,000 in fixed costs per month; however, the investment will also cause average variable cost to decline to $100 per sofa. c) How much profit does Allentown stand to make per month if it signs a contract with the Department store? What will average total cost be after signing and fulfilling the contract? d) Would you recommend signing the contract? Explain why or why not.