Question 1

Shades store operates in a booth at Wollongong City Mall, selling sunglasses for $60 each. Shades currently pays to the $2 000 a month to rent the booth and pays two part-time employees to each work 160 hours a month at $20 per hour. Shades shares a manager to look after the kiosk with a neighbouring kiosk and paid 50% of the annual salary plus entitlement. The manager is paid $60,000 annual salary plus entitlement 20% of the salary. The cost of the bags from the wholesaler is $20 each.

Required (show all the workings) a) How many bags does Shades need to sell each month to break even? b) If Shades wants to earn an operating income of $5 400 per month, how many bags does Shades need to sell. c) If Shades hourly employees agreed to a 15% sales-commission-only pay structure instead of their hourly pay, how many bags would Shades need to sell to earn an operating income of $5 400