Broadpull Rugs is holding a 4-week carpet sale at Tryst's Club, a local warehouse store. Broadpull...

Transcribed Image Text:

Broadpull Rugs is holding a 4-week carpet sale at Tryst's Club, a local warehouse store. Broadpull Rugs plans to sell carpets for $1,500 each. The company will purchase the carpets from a local distributor for $900 each, with the privilege of returning any unsold units for a full refund. Tryst's Club has offered Broadpull Rugs two payment alternatives for the use of space. • Option 1: 25% of total revenues eaned during the sale periode · Option 2: A fixed payment of $30,000 for the sale period - Assume Broadpul1 Rugs will incur no other costs. e Required:e 1. Calculate the breakeven point in units for (a) option 1 and (b) option 2. 2. At what level of revenues will Broadpull Rugs earn the same operating income under either option? a. For what range of unit sales will Broadpull Rugs prefer option 1? b. For what range of unit sales will Broadpull Rugs prefer option 2? Calculate the degree of operating leverage at sales of 80 units for the two rental options. 3. Broadpull Rugs is holding a 4-week carpet sale at Tryst's Club, a local warehouse store. Broadpull Rugs plans to sell carpets for $1,500 each. The company will purchase the carpets from a local distributor for $900 each, with the privilege of returning any unsold units for a full refund. Tryst's Club has offered Broadpull Rugs two payment alternatives for the use of space. • Option 1: 25% of total revenues eaned during the sale periode · Option 2: A fixed payment of $30,000 for the sale period - Assume Broadpul1 Rugs will incur no other costs. e Required:e 1. Calculate the breakeven point in units for (a) option 1 and (b) option 2. 2. At what level of revenues will Broadpull Rugs earn the same operating income under either option? a. For what range of unit sales will Broadpull Rugs prefer option 1? b. For what range of unit sales will Broadpull Rugs prefer option 2? Calculate the degree of operating leverage at sales of 80 units for the two rental options. 3.

Answer rating: 100% (QA)

Solulion bacale Euee poinbe Computalion break Evu in Units sold be 9 la Guantily Caupet... View the full answer