Question
HELP, Im pretty sure I did this wrong. Angie Silva has recently opened The Sandal Shop, a store that specializes in fashionable sandals in Brisbane,
HELP, Im pretty sure I did this wrong.
Angie Silva has recently opened The Sandal Shop, a store that specializes in fashionable sandals in Brisbane, Australia. Angie 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--- $3.80 Variable expenses per pair of sandals--- $1.14 Contribution margin per pair of sandals-- $2.66 Fixed Expenses per year: Building Rent--- 30,000 Equipment Depreciation--- 10,000 Selling--- 86,600 Administration--- 33,000 Total Fixed Expenses--- 159,600 Required: 1. How many pairs of sandals must of sold each year to break even? 60,000
What does this represent in total sales dollars? 228000 2. (SEE PICTURE)
3. How many pairs of sandals must be sold to earn a $5,320 target profit for the first year?
4. ---
5. Refer to the original data. During the first year, the store only sold 3,000 pairs of sandals and reported the following operating results: Sales (77,500 pairs)--- $294500 Variable exprenses--- $88350 Contribution margin--- $206150 Fixed expenses--- $159600 Net Operating Income--- $46550 a. What isthe store's degree of operating leverage? b. Andie is confident that with a more intense sales effort and with creative advertising program she can increase sales by 20% next year. What would be the expected percentage increase in net operating income? use the degree of operating lleverage to compute your answer.
2. Prepare a CVP graph and a proft graph for the store from zero pairs up to 70,000 pairs of sandais sold each year Indicase the break-even point on the graph (Use the ine tool to draw a single line (Total Sales, Fixed Expense, Total Expense, Profit) This line should only contain the two endpoints Use the point tool (Break Even Point) to plot te Break Even Point. For your graph to grade correctly, you must been plotted, click on the lne (not indwidual points) and a tool lcon will pop up. You can use this to enter exact coordinates for your points as needed. To remove a Enelpoint from the graph. click en the line/point and select delete option y coordinates for each endpoint Once all Cost-volume-profit graph Total Expense Total Expense Even Point 60000 0000 Number of Pairs Sandals Sold Profit Graph Break Even 000 20000 0000 50000 Sales Volume in UnitsStep by Step Solution
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