Question

please complete all 8 parts. Thank you

Curt Rugs is holding a 2-week carpet sale at Jamison's Club, a local warehouse store. Curt Rugs plans to sell carpets for $600 each. The company will purchase the carpets from a local distributor for $330 each with the privilege of returning any unsold units for a full refund, Jamison's Club has offered Curt Rugs two payment alternatives for the use of space (Click the icon to view the additional information) Read the requirements Requirements 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 X 1. Calculate the breakeven point in units for (a) option 1 and (b option 2 2. At what level of revenues will Curt Rugs earn the same operating income under other option? a. For what range of unit salos wil Curt Rugs prefer option 1? b. For what range of unit sales will Curt Rugs profor option ? 3. Calculate the degree of operating leverage at sales of 72 units for the two rental options 4. Briefly explain and interpret your answer to requirement 3 More info • Option 1: A fixed payment of $8,640 for the sale period Option 2 20% of total revenues earned during the sale period Assume Curt Rugs will incur no other costs Print Done Choose from any did Print Done Check Answer 8 Parts remaining hp

Answer 1

A 6.00 O Selling Price per carpet variable Lest per Lenit Contribution margin per unit fixed cost option option B 60o 330 480 120 270 8640 Break - Even point fixed cost 32 contribution margin Per whit ② level of same operating system Difference in fixed cost Difference in contri- bution Margin per unit level of same operating System o petion A option B 8640 o | 150 57.6 51.6 units, option A will be (a) for sales above Prefered, (6) for sales up to 57,6 units prefered option B will be 3 Degree of operating leverage conribution Margin operation Income option А А. 2.25 270 120 option B M 120 120 1

1 4 (2) for every change in sales Operating Incore will Change by us times of change in sales kender 2.25), Option A. (b) for Every change increase in sales operating will change by sare % change in sales option B. Income under