Question 2

Manly Soles Pty Limited (Manly Soles) is a manufacturer of women’s shoes and has been doing this successfully for the last 4 years. It currently sells its products to a number of retailers such as department stores and smaller specialty stores.

It produces shoes in batches of 1,000 and the costs to produce these shoes is set out below. These shoes are sold for $100 a pair.

The owners of Manly Soles want to expand and grow this business. They are thinking of changing their sales strategy to selling online directly to end customers. They will continue to design and manufacture the shoes themselves.

Please also consider the following information: -

1. What is the unit contribution margin (pairs of shoes) per year? (Calculate to 2 decimal places)

2. What is the breakeven number of shoes (pairs) that Manly Soles must sell in a year? (Round to nearest whole number)?

3. Manly Soles would like to earn a Net Income of $600,000 after tax for the year. How many pairs of shoes will Manly Soles have to sell annually to achieve this (assuming a 30% tax rate)?

4. Describe the four (4) components of Kaplan and Norton’s Balanced Scorecard and provide an example of each component.

5. Explain how you would use Kaplan and Norton’s Balanced Scorecard and Strategy maps, in developing an online strategy for Manly Soles.