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(6.) The Walk Rite Shoe Company operates a chain of rented shoe stores. The stores sell ten different styles of relatively inexpensive, men's shoes
(6.) The Walk Rite Shoe Company operates a chain of rented shoe stores. The stores sell ten different styles of relatively inexpensive, men's shoes with identical purchase costs and selling price. Walk Rite is trying to determine the desirability of opening another store, which would have the following expense and revenue relationships: Variable Data: Selling price Cost of shoes Sales commissions Total variable expenses Annual fixed expenses: Rent Salaries Per Pair P300.00 195.00 50.00 P245.00 P 60,000 200,000 80,000 20,000 P360,000 Advertising Other fixed expenses Total Required: (Note: Consider each question independently) (a) What is the annual breakeven point in peso sales and in unit sales? (b) If 35,000 pairs of shoes are sold, what would be the store's net income (loss)? (c) If the store manager were paid 1.00 per pair as commission, what would be the annual breakeven point in peso sales an in unit sales? (d) Refer to the original data. If sales commissions were discontinued in favor of an P81,000 increase in fixed salaries, what would be the annual breakeven point in peso and in unit sales? (e) Refer to the original data. If the store manager were paid P1.00 per pair as commission on each pair sold in excess of the breakeven point, what would be the store's net income if 50,000 pairs were sold?
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