Scarlett Jackson operates a puppy spa in Edmonton, mostly offering groomings. She estimates the following revenue and costs during the year: Item Annually Per Grooming (unit) Unit Sales Price $ 70.00 . $ $ 8.00 $ $ 9.00 Advertising $12,000 8 Depreciation on the building and equipment $15,000 9 Miscellaneous operating costs (per unit) 10 Office manager's Annual Salary $50,000 11 Spa Technician's Commissions (per unit) 12 Spa Technicians' Annual Salaries $ 73,000 13 Spa Supplies (per unit) 14 Total (no marks allocated for yellow area) 15 16 Required: a) How much is the contribution margin per grooming (unit)? (1 mark) 17 $ 3.00 b) Using your answer to part a, explain what the contribution margin per grooming (unit) means. Make B Cover Sheet Q1 Q2 Q3 Q4 Q5 Q6 Bonus Formulas + Working Statistics 6 Required 17 a) How much is the contribution margin per grooming (unit)? (1 mark) b) Using your answer to part a, explain what the contribution margin per grooming (unit) means. Make 18 sure you are using language that Scarlett, a non-accountant, can understand. (1 mark) 19 20 21 c) How many groomings (units) must be sold in order to earn operating income of 22 $100,000? (2 marks) 23 Desired Operating income 100,000 24 d) What will happen to income if they sell less units than calculated in part c? (1 mark) 25 20 e Cover Sheet 01 03 04 05 OG Bonus Formulas + e) Assume a break-even point in units of 3,000 groomings (units) and the spa currently sells 2,800 groomings (units). What does this mean for the income of the spa? List one thing Scarlett could do to improve the situation. Be specific using question data. No calculations are needed. (2 marks) -9 30 31 6) Scarlett is considering increasing the average sales price of a grooming to $80. What is the break-even point in units (groomings sold)? The variable cost 32 per unit and total fixed costs will not change. (2 marks) 33 New Selling Price 80 34 B) Considering the information in part e) and your answer in part f), should Scarlett implement the new sales price for groomings? (Yes or No) (1 mark) 35 B Cover Sheet 01 Q2 Q3 Non dimas WorkbookStatistis 04 05 Q6 Bonus Formulas + D A B B) Considering the information in parte) and your answer in part f), should Scarlett implement the new sales price for groomings? (Yes or No) (1 mark) 5 86 ) Before implementing the new price per grooming, is there any other advice you can give to Scarlett? Name one qualitative (non-financial) factor she should consider and why it is important to consider it. (2 37 marks) 38 39 40 42 43 44