5. What is Earrings Unlimiteds Quarterly break-even point in unit sales and dollar sales using the April, May, June quarters costs and price assumptions?

6. Using the same current quarters cost structure and earring price assumptions from #5 above, prepare a CVP graph showing cost and revenue data from zero to 350,000 earrings. Clearly indicate the break-even point on the graph.

7. Using your current cost structure and earring price from 5 above, if 300,000 earrings are sold in a the quarter, what would be Earrings Unlimiteds net operating income (loss)?

8. Use the same current quarters cost structure and earring price assumptions from #5 above. The company is considering paying the retail coordinator an incentive commission of $0.10 per pair of earrings. This will be on top of the salespeoples commission and there will be no change in fixed salaries. If this change is made, what will be the new break-even point in unit sales and dollar sales?

MOST INTERESTED ON ANSWERS FOR QUESTION 7 & 8.

Please explain step by step

You are a team of consultants who assist organizations with budgeting, and you provide data analysis to assist with decision making. You have just been hired as a consultant by Earrings Unlimited, a distributor of earrings to various retail outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgeting and at certain times of the year has experienced a shortage of cash. Since you are well trained in budgeting, you have decided to prepare a master budget for the upcoming second quarter. The organization is also interested in changing the commission structure to see if they can boost profits. To this end, you have worked with accounting and other areas to gather the information assembled below. The company sells many styles of earrings, but all are sold for the same price- $15 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings): The concentration of sales before and during May is due to Mother's Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month. Suppliers are paid $4.20 for a pair of earrings. One-half of a month's purchases is paid for in the month of purchase; the other half is paid for in the following month. All sales are on credit. Only 20% of a month's sales are collected in the month of sale. An additional 70% is collected in the following month, and the remaining 10% is collected in the second month following sale. Bad debts have been negligible. Monthly operating expenses for the company are given below: Insurance is paid on an annual basis, in November of each year. The company plans to purchase $17,200 in new equipment during May and $42,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $18,200 each quarter, payable in the first month of the following quarter. The company's balance sheet as of March 31 is given below: The company maintains a minimum cash balance of $52,000. All borrowing is done at the beginning of a month; any repayments are made at the end of a month. The company has an agreement with a bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all.of the accumulated interest on the loan and as much of the loan as possible (in increments of $1,000 ), while still retaining at least $52,000 in cash