The last step in the MBO system is making adjustments

It is easier to incorporate the impact of flotation costs on the cost of equity capital in using the dividend growth model rather than the Security Market Line

Indicate whether the statement is true or false.

CVP, alternative cost structures

SuperShades operates a kiosk at the local mall, selling sunglasses for $20 each. SuperShades currently pays $800 a month to rent the space and pays two full-time employees to each work 160 hours a month at $10 per hour. The store shares a manager with a neighboring mall and pays 50% of the manager's annual salary of $40,000 and benefits equal to 20% of salary. The wholesale cost of the sunglasses to the company is $5 a pair. Required: 1. How many sunglasses does SuperShades need to sell each month to break even? 2. If SuperShades wants to earn an operating income of $4,500 per month, how many sunglasses does the store need to sell? 3. If the store's hourly employees agreed to a 15% sales-commission-only pay structure, instead of their hourly pay, how many sunglasses would SuperShades need to sell to earn an operating income of $4,500? 4. Assume SuperShades pays its employees hourly under the original pay structure, but is able to pay the mall 8% of its monthly revenue instead of monthly rent. At what sales levels would SuperShades prefer to pay a fixed amount of monthly rent, and at what sales levels would it prefer to pay 8% of its monthly revenue as rent?