Maverick Makeup Studio provides makeup for events and generates approximately $50 per customer in revenue.

The studio's costs are as follows:

Annual Fixed Costs:

Rent $20,000

Utilities 15.000

Other costs 5,000

Total Fixed Costs $40,000

Variable costs:

Direct Materials $5

Direct Labour 13

Other costs 2

Total Variable cost $20 per costumer

The studio is targeting operating income of $90,000 for the year.

Required:

1. Calculate the total sales in units and dollars required to hit the target operating income (5 marks)

2. How many customers would the make-up studio have to sell to break-even (2.5 Marks)

3. Calculate the number of customers that the make-up has to be sold to so that the company generates as income of $80,000 (2.5 Marks)

4. Calculate the operating income if 6,000 customers are provided services (3 marks)

5. Should the company consider increasing their rent (for a new retail space) by an additional $35,000 annually if that means it will increase the sales by $17,000.

Please explain your answer step by step and use the numbers above.