Company B operates a chain of stores that sell different styles of inexpensive products with identical unit costs and selling prices. The selling price is 27,5 $ per unit. Each store has a store manager who is paid a fixed salary. Individual salespeople receive salary and sales commission. Company B is considering opening another store that is expected to have the cost relationships shown here:

Costs Amount ($)

Depreciation 72.000

Manufacturing cost of a product 17,5

Salaries 208.000

Lease payment 95.000

Miscellaneous fixed costs 1/15 of total of other fixed costs

Sales commission 2

a) If, in addition to his fixed salary, the store manager is paid a commission of 0,50 $ per unit in excess of the breakeven point, what would be the stores operating income if 62.750 units were sold (10 points)? b) If sales commissions are discontinued and fixed salaries are raised by 75.000 $, what would be the annual breakeven point in revenues ?