Bubba's Western Wear is a western hat retailer in Lubbock, Texas. Although Bubba's carries numerous styles of western hats, each hat has approximately the same price and invoice (purchase) cost, as shown in the following table. Sales personnel receive a commission to encourage them to be more aggressive in their sales efforts, Currently, the Lubbock economy is realy humming, and sales growth at Bubba' courteous staff to s has been great. The business is very competitive, however, and Bubba, the owner, has relied on his knowledgeable and attract and retain customers who otherwise might go to other western wear stores. Because of the rapid growth in sales, Bubba is also finding the management of certain aspects of the business more difficult, such as restocking inventory and hiring and training new salespeople. sales price Per unit variable expenses 00.00 31.50 $ 55.00 217,500 Purchase cost Sales comminsions Total per unit variable costs Total annual fixed expenses Advertising Rent Salariers 208,000 Total fixed expenses 6753,300 Required: 1. Calculate the annual breakeven point, both in terms of units and in terms of sales dollars. 2.If Bubba's sells 31,000 hats, what is its before-tax income or loss? Support your answer by preparing a contribution income statement 3. If Bubba's sells 44,000 hats, what is its margin of safety (MOS) and MOS ratio? 4. Bubba is considering the elimination of sales commissions completely and increasing salaries by $265,000 annually. What would be the new breakeven point in units? What would be the before-tax income or loss if 31,000 hats are sold with the new salary plan? m Bubbas 44,000 hats what is its margin of safety (MOS) and MOS ratio? s, 4. Bubba is considering the elimination of sales commissions completely and increasing salaries by $265,000 annually. W sells , the new breakeven point in units? What would be the before-tax income or loss if 31,000 hats are sold with the new salary Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Calculate the annual breakeven point, both in terms of units and in terms of sales dollars. (Do not round intermediate calculations.) In units In sales doliars Required 2> Complete this question by entering your answers in the tabs below. Required 1Required 2 Required 3Required 4 If Bubba's sells 31,000 hats, what is its before-tax income or loss? Support your answer by preparing a contribution income statement. C Required 1 Required 3> Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 If Bubba's sells 44,000 hats, what is its margin of safety (MOS) and MOS ratio? (Round "MOS ratio" answer to 1 decimal place.) Margin of safety (MOS) MOS ratio Complete this question by entering your answers in the tabs below. Required 1 Required 2Required 3Required4 Bubba is considering the elimination of sales commissions completely and increasing salaries would be the new breakeven point in units? What the before-tax salary plan? (Do not round intermediate calcbtuld be the before-tax income or loss if 31,000 hats are sold by $265,000 annually. What with the new round intermediate calculations.) New breakeven point in units Before-tax income or loss
