Cost$-$volume$-$profit analysis for a company

Instructions:

Sun Sports Inc. has several kiosks in large and medium$-$sized shopping centers that sell various styles of

sports hats for men and women, all at the same price. In addition to the regular salary, the company

pays a good commission to its salespeople so that they work hard and are proactive in sales. The

following cost and sales price information is representative of each kiosk individually.

The company wants to review its policies and provide additional incentives to strengthen sales. Provide

management with the following analysis of their stores:

Calculate the break$-$even point in units and sales dollars of a kiosk.

Prepare a cost$-$volume$-$profit graph that shows the revenue and costs of a kiosk from $0$ to $15,000$ caps

and the break$-$even point.

Present the net operating results $($net profit or loss$)$ if $9,000$ hats are sold per year.

The company is evaluating the possibility of offering a commission of $$1\mathrm{.}50$ per hat sold to the kiosk

supervisor $($in addition to the sales commissions paid to salespeople at the kiosk$).$ Determine the new

break$-$even point in sales dollars and units sold if this commission is added.

Instead of the previous $$1\mathrm{.}50$ commission per hat sold, another alternative that the company wants to

evaluate is to offer the supervisor only $$1\mathrm{.}50$ for each hat sold in excess of the break$-$even point. If only

this commission is applied, what would be the net operating result $($net profit or loss$)$ if $12,000$ hats are

sold per year?

Another third alternative, instead of the previous ones, is to completely eliminate sales commissions

and increase fixed salaries by an additional $$15,500$ annually.

to$.$ Presents the break$-$even point in dollars and sales units for this alternative.

b$.$ Explain whether or not you would recommend this alternative and why.