Foot buys hiking socks for $ 8 a pair and sells them for $ 10. Management budgets monthly fixed expenses of $ 15,000 for sales volumes between 0 and 12,000 pairs.

Requirements

1.	Use the income statement approach and the shortcut unit contribution margin approach to compute monthly breakeven sales in units.
2.	Use the shortcut contribution margin ratio approach to compute the breakeven point in sales revenue (sales dollars).
3.	Compute the monthly sales level (in units) required to earn a target operating income of $18,000. Use either the income statement approach or the shortcut contribution margin approach.
4.	Prepare a graph of EnergyEnergy Foot's CVP relationships. Draw the sales revenue line, the fixed expense line, and the total expense line. Label the axes, the breakeven point, the operating income area, and the operating loss area.