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Angie Silva has recently opened The Sandal Shop in Brisbane, Australia, a store that specializes in fashionable sandals. Angie has just received a degree in business and she is anxious to apply the principles she has learned to her business. In time, she hopes to open a chain of sandal shops. As a first step, she has prepared the following analysis for her new store: Sales price per pair of sandals Variable expenses per pair of sandals Contribution margin per pair of sandals Fixed expenses per year Building rental Equipment depreciation Selling Administrative Total fixed expenses 2.00 120 080 $ 9,000 5,000 17,600 18,000 49 600 Required: 1. How many pairs of sandals must be sold each year to break even? What does this represent in total dollar sales? pairs Break-even point in unit sales Break-even point in dollar sales 3. Angie has decided that she must eam at least $1,600 the first year to justifty her time and effort. How many pairs of sandals must be sold to reach this target profit? Unit sales to attain target proft pairs 4. Angie now has two salespersons working in the store-one full time and one part time. It will cost her an additional $10,000 per year to convert the part-time position to a full-time position. Angie believes that the change would bring in aan additional $32,000 in sales each year. Should she convert the position? Use the incremental approach. No Yes

Angie Silva has recently opened The Sandal Shop in Brisbane, Australia, a store that specializes in fashionable sandals. Angie has just received a degree in business and she is anxious to apply the principles she has learned to her business. In time, she hopes to open a chain of sandal shops. As a first step, she has prepared the following analysis for her new store: Sales price per pair of sandals Variable expenses per pair of sandals Contribution margin per pair of sandals Fixed expenses per year Building rental Equipment depreciation Selling Administrative Total fixed expenses 2.00 120 080 $ 9,000 5,000 17,600 18,000 49 600 Required: 1. How many pairs of sandals must be sold each year to break even? What does this represent in total dollar sales? pairs Break-even point in unit sales Break-even point in dollar sales 3. Angie has decided that she must eam at least $1,600 the first year to justifty her time and effort. How many pairs of sandals must be sold to reach this target profit? Unit sales to attain target proft pairs 4. Angie now has two salespersons working in the store-one full time and one part time. It will cost her an additional $10,000 per year to convert the part-time position to a full-time position. Angie believes that the change would bring in aan additional $32,000 in sales each year. Should she convert the position? Use the incremental approach. No Yes

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Angie Silva has recently opened The Sandal Shop in Brisbane, Australia, a store that specializes in fashionable sandals. Angie has just received a degree in business and she is anxious to apply the principles she has learned to her business. In time, she hopes to open a chain of sandal shops. As a first step, she has prepared the following analysis for her new store: Sales price per pair of sandals Variable expenses per pair of sandals Contribution margin per pair of sandals Fixed expenses per year Building rental Equipment depreciation Selling Administrative Total fixed expenses 2.00 120 080 $ 9,000 5,000 17,600 18,000 49 600 Required: 1. How many pairs of sandals must be sold each year to break even? What does this represent in total dollar sales? pairs Break-even point in unit sales Break-even point in dollar sales 3. Angie has decided that she must eam at least $1,600 the first year to justifty her time and effort. How many pairs of sandals must be sold to reach this target profit? Unit sales to attain target proft pairs 4. Angie now has two salespersons working in the store-one full time and one part time. It will cost her an additional $10,000 per year to convert the part-time position to a full-time position. Angie believes that the change would bring in aan additional $32,000 in sales each year. Should she convert the position? Use the incremental approach. No Yes
Transcribed Image Text:Angie Silva has recently opened The Sandal Shop in Brisbane, Australia, a store that specializes in fashionable sandals. Angie has just received a degree in business and she is anxious to apply the principles she has learned to her business. In time, she hopes to open a chain of sandal shops. As a first step, she has prepared the following analysis for her new store: Sales price per pair of sandals Variable expenses per pair of sandals Contribution margin per pair of sandals Fixed expenses per year Building rental Equipment depreciation Selling Administrative Total fixed expenses 2.00 120 080 $ 9,000 5,000 17,600 18,000 49 600 Required: 1. How many pairs of sandals must be sold each year to break even? What does this represent in total dollar sales? pairs Break-even point in unit sales Break-even point in dollar sales 3. Angie has decided that she must eam at least $1,600 the first year to justifty her time and effort. How many pairs of sandals must be sold to reach this target profit? Unit sales to attain target proft pairs 4. Angie now has two salespersons working in the store-one full time and one part time. It will cost her an additional $10,000 per year to convert the part-time position to a full-time position. Angie believes that the change would bring in aan additional $32,000 in sales each year. Should she convert the position? Use the incremental approach. No Yes
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