Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

MSM company sells clothing for young adults. The firm has normal monthly fixed costs of $90,000 ($38,000 of this amount is fixed salaries). The firm's

MSM company sells clothing for young adults. The firm has normal monthly fixed costs of $90,000 ($38,000 of this amount is fixed salaries). The firm's variable cost ratio averages 60%. The firm operates 3 stores in the mid atlantic region. The firm is considering reducing monthly fixed salaries (currently $38,000) and using a combination salary and commission employee compensation plan. The reduction in fixed salaries would equal $10,000 monthly and be replaced with a 3% of gross sales commission payment. The 3% wold be shared by all fixed salary employees. a) calculate the new breakeven point in monthly sales dollars. b) calculate the new level of monthly sales dollars needed to earn an operating profit of $10,000 monthly.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Worship Audit Making Good Worship Better

Authors: Mark Earcy

1st Edition

1851742948, 978-1851742943

More Books

Students also viewed these Accounting questions

Question

Identify four applications of HRM to healthcare organizations.

Answered: 1 week ago