TopHats operates a kiosk at a local mall, selling hats for $30 each. TopHats currently pays $900 a month to rent the space and pays three full-time employees to each work 160 hours a month at $12 per hour. The store shares a manager with a neighbouring mall pays 40% of the manager's annual salary of $60,000 and benefits equal to 18% of the salary. The wholesale cost of the hats to the company is $10 a hat.

Required:

a. How many hats does TopHats need to sell each month to break even?

b. If TopHat wants to earn an operating income of $5,000 per month, how many hats does the store need to sell?

c. If the store's employees agree to a 20% commission-only pay structure, instead of their hourly pay, how many hats would TopHats need to sell to earn an operating income of $5,000 per month?

d. Assume TopHats pays its employees hourly under the original pay structure but can pay the mall 5% of its monthly revenue instead of monthly rent. At what sales levels would TopHats prefer to pay a fixed amount of monthly rent, and at what sales level would if prefer to pay 5% of its monthly revenue as rent?