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Answer questions 1-4 with specifc details. thanks! 3-46 CVP, alternative cost structures. TopHats operates a kiosk at a local mall, selling hats for $30 each.
Answer questions 1-4 with specifc details. thanks!
3-46 CVP, alternative cost structures. TopHats operates a kiosk at a local mall, selling hats for $30 each. TopHats currently pays $900 a month to rent the space and pays three full-time employees to each work 160 hours a month at $12 per hour. The store shares a manager with a neighboring mall and pays 40% of the manager's annual salary of $60,000 and benefits equal to 18% of salary. The wholesale cost of the hats to the company is $10 a hat. Required: 1. How many hats does Top Hats need to sell each month to break even? 2. If TopHats wants to earn an operating income of $5,000 per month, how many hats does the store need to sell? 3. If the store's hourly employees agreed to a 20% sales-commission-only pay structure, instead of their hourly pay, how many hats would TopHats need to sell to earn an operating income of $5,000? 4. Assume TopHats pays its employees hourly under the original pay structure, but is able to pay the mall 5% of its monthly revenue instead of monthly rent. At what sales levels would TopHats prefer to pay a fixed amount of monthly rent, and at what sales levels would it prefer to pay 5% of its monthly revenue as rentStep by Step Solution
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