Question
3. Pablo Escobar has recently opened The Sandal Shop in Brisbane, Australia, a store that specializes in fashionable sandals. Pablo has just received a degree
3. Pablo Escobar has recently opened The Sandal Shop in Brisbane, Australia, a store that specializes in fashionable sandals. Pablo has just received a degree in business and she is anxious to apply the principles she has learned to her business. In time, she hopes to open a chain of sandal shops. As a first step, she has prepared the following analysis for her new store: Sales price per pair of sandals Variable expenses per pair of sandals Contribution margin per pair of sandals Fixed expenses per year: Building rental. Equipment depreciation Selling. Administrative Total fixed expenses Required: (15 Marks) $40 16 $24 $15,000 7,000 .20,000 18.000 $60,000 1. How many pairs of sandals must be sold each year to break even? What does this represent in total sales dollars? 2. Prepare a CVP graph or a profit graph for the store from zero pairs up to 4,000 pairs of sandals sold each year. Indicate the break-even point on your graph. 3. Pablo has decided that she must earn at least $18,000 the first year to justify her time and effort. How many pairs of sandals must be sold to reach this target profit
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