In 2015, Ella established Charming Nails, a business providing manicures and pedicures. She located her first store close to the RMIT Melbourne campus because she knew there was likely to be a high demand from students and staff for these services. She rented suitable premises, installed the required equipment, and then started recruiting and training a team of beauticians. Within one year of establishing the business, the business started generating a profit. In 2019, Ella raised additional capital from investors and opened additional stores. Charming Nails Pty Ltd (P/L) now operate ten stores across Melbourne and inner suburbs employing at least 25 beauticians and 10 store managers.

Shop managers receive a monthly salary and are employed on a permanent basis while beauticians get paid by the hour as they are employed on a casual basis. A beautician typically does about 9 jobs per day. All their stores are open every day of the year except for Sundays. Ella is always able to recruit the best beauticians, even at short notice, as and when required. Charming Nails P/L prides itself on the high-quality service they provide. The business is well known for the quality of their manicures and pedicures, excellent hygiene practices and an exceptional customer experience with comfortable furniture in a relaxed setting with mood music, sparkling water and French chocolate. Health inspectors from the Department of Health are always impressed with the standard of safety and hygiene in each of the stores. Compared to other beautician services provided locally, Charming Nails P/L do charge their customers considerably more for their manicures and pedicures. Ellas partner studied accounting at university and helps Ella on a casual basis with financial accounting and management accounting tasks for the business. He has a keen eye for detail and is very thorough when recording costs for the business. Table 1 provides some data about the business. Note that sales volume is measured in jobs. A job may be a manicure or a pedicure. If a customer has both a manicure and a pedicure in a single visit, it is counted as two jobs.With inflation steadily increasing in the past 12 months, customers of Charming Nails P/L are becoming anxious about the prices of manicures and pedicures particularly as competition is also becoming more intense. So, in 2023, Ella is struggling to maintain profitability for Charming Nails P/L. Investors in the business are also getting impatient with only modest dividends being paid. This has led some investors to want to sell the business. Ella needs to do something that will provide a significant improvement in profits within the next one to two years. To try to maintain sales, Charming Nails P/L is offering discounts when customers get a manicure and a pedicure in one visit or when they book and pay more than one week in advance. Ellas target for the year ending 30 June 2025 is to maintain the same sales volume at an average selling price 5% less than the prior financial year.

REQUIRED: 1. Explain whether Charming Nails P/L are taking a shareholder or stakeholder approach regarding the business. Ensure that you use two (2) examples of the choices made by Charming Nails P/L and explain how they each impact the shareholders/stakeholders in this case study.

2. Identify one fixed cost incurred by Charming Nails P/L and explain why you believe it is a fixed cost.

3. Use the high-low method and the data provided to: estimate the cost function for Charming Nails P/L (ensure that you retain TWO decimal points during calculations) and use the cost function to estimate the total expense for March 2023 based on 739 projected average daily sales (round final answer to a whole number) Ensure you show all workings as no marks will be awarded without workings