Teri Hall has recently opened Sheer Elegance, Inc., a store specializing in fashionable stockings. Ms. Hall 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 particularly 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		$ 43.00
Variable expense per pair of stockings		17.20
Contribution margin per pair of stockings		$ 25.80
Fixed expense per year:
Building rental	$	11,352
Equipment depreciation		2,838
Selling		28,380
Administrative		14,190
Total fixed expense	$	56,760

Required:

1.	How many pairs of stockings must be sold to break even? What does this represent in total dollar sales? (Round "per unit" values to 2 decimal places and final answers to the nearest whole number. Do not round other intermediate calculations. Omit the "$" sign in your response.)

Break-even point in unit sales	pairs
Break-even point in dollar sales	$

3.	How many pairs of stockings must be sold to earn a $9,000 target profit for the first year? (Round the cost per unit to 2 decimal places and final answer to the nearest whole number. Do not round other intermediate calculations.)

Unit sales to attain target profit

pairs

4.	Refer to the original data. Actual operating results for the first year are as follows:

Sales	$	129,000
Variable expenses		51,600
Contribution margin		77,400
Fixed expenses		56,760
Net operating income	$	20,640

a.	What is the store