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Question 1 Repair Your Sole is a shoe repair business located in a major shopping centre. The following financial data is available for the last
Question 1 Repair Your Sole is a shoe repair business located in a major shopping centre. The following financial data is available for the last two financial periods: Shoe repairs (number of units) Total Sales 2021 Total costs (includes total fixed costs and total variable costs) Profit The selling price of a shoe repair is $120. The variable cost per shoe service is $40. The fixed costs per year are $250,000. The owner of the business is now doing some planning for 2023. Required a. Calculate the break-even level of sales in both units and dollars in 2022. [4 marks] b. The owner of the business is considering purchasing a new machine which would depreciate at $90,000 per year, but would lead to a decrease in variable costs of $5.00 per unit. What is the new breakeven point in both units and dollars if she went ahead with this purchase? [4 marks] c. Assuming the owner went ahead with the proposal in b above, what level of sales are required in 2023 to maintain the profit at $950,000. [4 marks] d. Repair Your Sole has a competitor in a nearby shopping centre that provides the same service. They have the same variable costs per unit, but offer a lower price. The competitors financials show the same profit as Repair Your Sole. Explain two (2) ways this could be possible
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