Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help me with this question thank you!! Bubba's Western Wear is a western hat retailer in Lubbock, Texas. Although Bubba's carries numerous styles of

Please help me with this question thank you!!

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed
Bubba's Western Wear is a western hat retailer in Lubbock, Texas. Although Bubba's carries numerous styles of western hats, each hat has approximately the same price and invoice {purchase} cost, as shown in the following table. Sales personnel receive 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 relied on his knowledgeable and courteous staff to attract and retain customers who otherwise might go to other western wear stores. Because of the rapid growth in sales, Bubba is also nding the management of certain aspects of the business more difcult, such as restocking inventory and hiring and training new salespeople. Sales price $ 80.60 Per unit variable expenses Purchase cost 29.50 Sales commissions 25.56 Total per' unit variable costs 5 55.69 Total annual fixed expenses Advertising 523?, 500 Rent 218,m Salaries 343,?50 Total fixed expenses $799,258 | Required: 1. Calculate the annual breakeven point, both in terms of units and in terms of sales dollars. 2. If Bubba's sells 33,000 hats, what is its beforetax income or loss? Support your answer by preparing a contribution income statement. 3. If Bubba's sells 46,000 hats, what is its margin of safety [MOS] and MOS ratio? 4. Bubba is considering the elimination of sales commissions completely and increasing salaries by $286,500 annually. What would be the new breakeven point in units":I What would be the beforetax income or loss if 33,000 hats are sold with the new salary plan? ' Required 1 Required 2 Required 3 Required 4 Calculate the annual [meal-{even point, both in-ten'ns of. units. and in terms of sales dollars. him not round intermediate calculations} _ In sales dollars _ Required 1 Required 2 Required 3 Required 4 If Bubba's sells 33,000 hats, what is its before-tax income or loss? Support your answer by preparing a contribution income statement. Before-tax income or loss Contribution Income StatementRequired 1 Required 2 Required 3 Required 4 If Bubba's sells 46,000 hats, what is its margin of safety (MOS) and MOS ratio? (Round "MOS ratio" answer to 1 decimal place.) Margin of safety (MOS) MOS ratio %Required 1 Required 3 Required 4 Buhba-is considering the elimination of sales commissions completely and increasing salaries, by $286,550 annually. What would be the new breakeven point in units? What would be the before-taxincpme or loss if 33,1300 hats are sold with the new salary-plan?-(Do not round intermediate calculations.) New breakwen poini in units - Beforetax income or loss

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Statistics The Exploration & Analysis Of Data

Authors: Roxy Peck, Jay L. Devore

7th Edition

0840058012, 978-0840058010

Students also viewed these Accounting questions