Homework: Hw#1 CVP Sa Score: 0.17 of 1 pt 3 of 3 (2 complete) HW Score: 39.05%, 1.17 of 3 The Great Shoe Company operates a chain of shoe stores that sell 10 different styles of inexpensive men's Great Shoe Company is considering an alternative compensation plan; one in which the sales shoes with identical unit costs and selling prices. A unit is defined as a pair of shoes. Each store has a store commissions are discontinued and fixed salaries are raised by a total of $16,000, Assume the role of the manager who is paid a fixed salary. Individual salespeople receive a fixed salary and a sales commission. owner of Great Shoe Company. Great is considering opening another store that is expected to have the revenue and cost relationships Read shown here: 1 Requirements B (Click the icon to view the revenue and cost information.) Jannual sales of the new -X i Data Table sation plan. (Use parent| A B D ixed costs 1 Unit Variable Data (per pair of shoes) Annual Fixed Costs 260,000 1. As owner, which sales compensation plan would you choose if forecasted annual sales of the new store were at least 9,000? What do you think of the motivational aspect of your chosen compensation plan? 2. Suppose the target operating income is $43,000. How many units must be sold to reach the target operating income under (a) the original salary-plus-commissions plan and (b) the higher- fixed-salaries-only plan? Which method would you prefer? Explain briefly. 3. You open the new store on January 1, 2020, with the original salary-plus-commission compensation plan in place. Because you expect the cost of the shoes to rise due to inflation, you place a firm bulk order for 9,000 shoes and lock in the $20.00 price per unit. But toward the end of the year, only 7,500 shoes are sold, and you authorize a markdown of the remaining inventory to $40 per unit. Finally, all units are sold. Salespeople, as usual, get paid a commission of 8% of revenues. What is the annual operating income for the store? 2 Selling price $ 50.00 Rent $ 45,000 (Use parentheses or ar 3 Cost of shoes $ 20.00 Salaries 156,000 $ (6,000) 4 Sales commission 4.00 Advertising 45,000 5 Variable cost per unit $ 24.00 Other fixed costs 14,000 wer. 6 Total fixed costs $ 260,000 Clear All Print Done