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Chloe Rugs is holding a 2-week carpet sale at Jack's Club, a local warehouse store. Chloe Rugs plans to sell carpets fo $800 each. The company will purchase the carpets from a local distributor for $560 each, with the privilege of returning any unsold units for a full refund. Jack's Club has offered Chloe Rugs two payment alternatives for the use of space. (Click the icon to view the additional information.) Read the 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 = Requirements 1. Calculate the breakeven point in units for (a) option 1 and (b) option 2. 2. At what level of revenues will Chloe Rugs earn the same operating income under either option? a. For what range of unit sales will Chloe Rugs prefer Option 1? b. For what range of unit sales will Chloe Rugs prefer Option 2? 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: 15% of total revenues earned during the sale period Assume Chloe Rugs will incur no other costs

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