NO. 4 CVP (LO 3 - 10 Mark) Kathy has recently opened Girly Shop, a store specializing in fashionable stockings. Kathy has just completed a course in managerial accounting, and she believes that she can apply certain aspects of the course to her business. She is particualrly interested in adopting the cost-volume- profit (CVP) approach to decision making. Thus, she has prepared the following analysis: Sales price per pair of stockings Variable expense per pair of stockings Contribution margin per pair of stockings Fixed expense per year: Building rental Equipment depreciation Selling Administrative Total fixed expense $2.00 $0.70 $1.30 $12,000 $ 3,000 $30,000 $25,000 $70,000 Required: a. How many pairs of stockings must be sold to break even? What does this represent in total dollar sales? b. How many pairs of stockings must be sold to earn a $15,000 target profit for the first year? c. Kathy now has one full-time and one part-time sales person working in the store. It will cost her an additional $10,500 per year to convert the part-time position to a full-time position. Kathy believes that the change would bring in an additional $20,000 in sales each year. Should she convert the position? Use the incremental approach. Do not prepare an income statement