JoanahasrecentlyopenedBeautyInc.,astorespecializinginfashionablestockings.Ms.Joanahasjustcompletedacourseinmanagerialaccounting,andshebelievesthatshecanapplycertainaspectsofthecoursetoherbusiness. She is particularly interested in adopting the cost-volume-profit (CVP) to decision making. Thus, she has prepared the following analysis.

Sales price per pair of stockings $2.00 Variable expense per pair of stockings $0.80 Contribution margin per pair of stockings $1.20 Fixed expense per year: Building rental $12,000 Equipment depreciation $ 3,000 Selling $30,000 Administrative $15,000 Total fixed expense $60.000