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Aviator Station, Inc. operates a chain of high-end athletic apparel stores. The stores sell ten different styles of sweatpants with identical unit costs and
Aviator Station, Inc. operates a chain of high-end athletic apparel stores. The stores sell ten different styles of sweatpants with identical unit costs and selling prices. A unit is defined as one pair of sweatpants. Each store has a manager who is paid a fixed salary. Individual salespeople receive a fixed salary and a sales commission. Aviator is trying to determine the desirability of opening another store, which is expected to have the following revenue and cost relationships: Unit variable data: Selling price Cost of pants Sales commissions Total variable costs Per Pairi $200 $59.50 $4.50 $64 Annual fixed costs: Rent $360,000 Salaries $200,000 Advertising $180,000 Other fixed costs $180,000 Total fixed costs $920,000
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