Arches-R-Us operates a chain of shoe stores. The stores sell inexpensive mens shoes with identical unit costs and selling prices. A unit is defined as a pair of shoes. Each store has a manager who is paid a fixed salary. Individual salespeople receive a fixed salary and a sales commission. Walk Rite is trying to determine the desirability of operating another store, which is expected to have the following revenue and cost relationships:

Per Pair

Sales commission per pair $1.50

Rent per month 12,000

Salaries per year 190,000

Advertising per year 70,000

Misc. fixed costs per month 2,500

Selling price per pair $40.00

Manufacturing Cost of shoes per pair $17.00

*** The tax rate is 20%

1) What is the annual break even point in units?

2) What is the annual breakeven point in revenue?

3) If 30,000 units are sold, what will be the stores operating income (if it is a loss, input it as a negative number)

4) If sales commissions were discontinued for individual sales people in favor of a $60,000 increase in fixed salaries, what would be the new annual breakeven point in units?

5) If sales commissions were discontinued for individual sales people in favor of a $60,000 increase in fixed salaries, what would be the new annual breakeven point in revenue?

6) Refer to the original data. How many would they have to sell annually to have an after tax, net income of $50,000?

7) Refer to the original data. What tis the contribution margin ratio? (Do not enter as a percentage. For example, if the answer was 23.33%, you need to enter it at .23)