Reference no: EM132793312
Problem - Walk Straight is a manufacturer and seller of high quality work boots.
Details for work boots are provided below:
Expected Sales Per Annum 10,000 pairs
Average Selling Price Per a pair of boots $100
Variable Cost Per A pair of boots $100
Variable Cost Per A pair of boots $250,000
Tax Rate 30%
Required -
[1] How many pairs of work boots must be sold to "break even"? Show all calculations.
[2] Calculate the Net Profit After Tax based on Walk Straight expected sales per annum.
[3] The management of Walk Straight would like to earn a Net Profit After Tax of $400,000. How many work boots will need to be sold to achieve this target? Show calculations.
[4] Is the target of work boots in [3] achievable? Explain your answer with reference to relevant calculations.
[5] Provide 2 alternative strategies Walk Straight could use to increase its profitability.
[6] Identify 1 advantage and 1 disadvantage associated with each strategy in [5] above.