Baker Optical Shophasbeen in operation for several years. Analysis of the firms recent financial statements and records reveal the following:

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(Retail merchant CVP) Baker Optical Shop has been in operation for several years. Analysis of the firm's recent financial statements and records reveal the following: Average selling price per pair of glasses $70 Variable expenses per pair: Lenses and frames $28 Sales commission 12 Variable overhead 8 Annual fixed costs: Selling expenses $18,000 Administrative expenses 48,000 The company's effective tax rate is 40 percent. Sara Baker, company president, has asked you to help her answer the following questions about the business. a. What is the break-even point in pairs of glasses? In dollars? b. How much revenue must be generated to produce $80,000 of pretax earn- ings? How many pairs of glasses would this level of revenue represent? e. Baker is considering adding a lens-grinding lab, which will save $6 per pair of glasses in lens cost, but will raise annual fixed costs by $8,000. She expects to sell 5,000 pairs of glasses. Should she make this investment? f. A marketing consultant told Baker that she could increase the number of glasses sold by 30 percent if she would lower the selling price by 10 percent and spend $20,000 on advertising. She has been selling 3,000 pairs of glasses. Should she make these two related changes