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:

	2021	2022
Shoe repairs (number of units)	10,000	15,000
Total Sales	1,200,000	1,800,000
Total costs (includes total fixed costs and total variable costs)	650,000	850,000
Profit	550,000	950,000

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.

[4 marks]