Question

Required information The following information applies to the questions displayed below.) Angie Silva has recently opened The Sandal Shop in Brisbane, Australia, a store that specializes in fashionable sandals. In time, she hopes to open a chain of sandal shops. As a first step, she has gathered the following data 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 $ 5,900 5,900 5,900 21,300 $ 39,000 3. Angie has decided that she must earn a profit of $19,500 the first year to justify her time and effort. How many pairs of sandals must be sold to attain this target profit? Unit sales to attain target profit required information The following information applies to the questions displayed below. Angie Silva has recently opened The Sandal Shop in Brisbane, Australia, a store that specializes in fashionable sandals. In time, she hopes to open a chain of sandal shops. As a first step, she has gathered the following data 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 $ 5.900 5.900 5.900 21.300 $39.000 4. Angie now has two salespersons working in the store-one full time and one part time. It will cost her an additional 59,000 per year to convert the part-time position to a full-time position. Angie believes that the change would increase annual sales by $26.000. Should she convert the position? Use the incremental approach

Answer 1

We cannot determine the number of sandals to sell for the target profit without specific financial figures such as sales price and variable expenses. For the incremental approach decision, Angie should not convert the part-time to full-time as the costs outweigh the increased revenue.

Step-by-step explanation:

To determine how many pairs of sandals must be sold to attain a target profit of $19,500, one must use the formula for calculating the break-even point in units, which is the sum of fixed costs plus target profit divided by contribution margin per unit. The calculation for Angie's Sandal Shop would look like this:

Number of pairs needed = (Total fixed expenses + Target profit) / Contribution margin per pair

Unfortunately, key information such as the sales price per pair of sandals, variable expenses per pair, and contribution margin per pair are missing in the provided data. Therefore, without these figures, it is impossible to provide the exact number of pairs that must be sold.

Concerning whether Angie should convert the part-time position to a full-time position based on an incremental approach, she would compare the incremental costs with the incremental revenue. To evaluate:

Incremental Cost = Additional cost to convert part-time to full-time

Incremental Revenue = Increase in sales expected from conversion

The decision would be favorable if the incremental revenue surpasses incremental costs. In the provided scenario:

Incremental Cost = $59,000

Incremental Revenue = $26,000

Since the incremental cost is higher than the incremental revenue, it would not be advisable for Angie to convert the part-time position to a full-time position as it would not increase overall profitability.