(Break-even

point and operating

leverage)

Footwear Inc. manufactures a complete line of men's and women's dress shoes for independent merchants. The average selling price of its finished product is

$75

per pair. The variable cost for this same pair of shoes is

$65

.

Footwear Inc. incurs fixed costs of

$170 comma 000

per year.

a. What is the break-even point in pairs of shoes sold for the company?

b. What is the dollar sales volume the firm must achieve to reach the break-even point?

c. What would be the firm's profit or loss at the following units of production sold:

5 comma 000

pairs of shoes?

11 comma 000

pairs of shoes?

17 comma 000

pairs of shoes?