Bubba's Western Wear Is a western hat retaller in Lubbock, Texas. Although Bubba's carrles numerous styles of western hats, each hat

has approximately the same price and involce $($purchase$)$ cost$,$ as shown in the following table. Sales personnel recelve a commission

to encourage them to be more aggressive in their sales efforts. Currently, the Lubbock economy is really humming, and sales growth

at Bubba's has been great. The business is very competitive, however, and Bubba, the owner, has relled on his knowledgeable and

courteous staff to attract and retain customers who otherwise might go to other western wear stores. Because of the rapld 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.

Requlred:

Calculate the annual breakeven point, both in terms of units and in terms of sales dollars.

If Bubba's sells $32,000$ hats, what is Its before$-$tax Income or loss? Support your answer by preparing a contribution Income

statement.

If Bubba's sells $45,000$ hats, what is its margin of safety $($MOS$)$ In dollars and MOS ratio?

Bubba is considering the elimination of sales commissions completely and increasing salarles by $$275,625$ annually. What would be

the new breakeven point In units? What would be the before$-$tax Income or loss if $32,000$ hats are sold with the new salary plan?

Complete this question by entering your answers in the tabs below.

If Bubba's sells $32,000$ hats, what is its before$-$tax income or loss? Support your answer by preparing a contribution income

statement.