Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

plz help asap thank you! Bubba's Western Wear is a western hat retailer in Lubbock, Texas. Although Bubba's carries numerous styles of western hats, each

plz help asap thank you!
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image 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 finding the management of certain aspects of the business more difficult, such as restocking inventory and hiring and training new salespeople. Required: 1. Calculate the annual breakeven point, both in terms of units and in terms of sales dollars. 2. If Bubba's sells 22,000 hats, what is its before-tax income or loss? Support your answer by preparing a contribution income statement. 3. If Bubba's sells 32,000 hats, what is its margin of safety (MOS) in dollars and MOS ratio? 4. Bubbs is considering the elimination of sales commissions completely and increasing salaries by $157,000 annually. What would be the new breakeven point in units? What would be the before-tax income or loss if 22,000 hats are sold with the new salary plan? Caiculate the annual breakeven point, both in terms of units and in terms of sales dollars. (Do not round intermediate calculations.) If Bubba's sells 22,000 hats, what is its before-tax income or loss? Support your answer by preparing a contribution income statement. If Bubba's sells 32,000 hats, what is its margin of safety (MOS) in dollars and MOS ratio? (Round "MOS ratio" answer to decimal place.) Bubba is considering the elimination of sales commissions completely and increasing salaries by $157,000 annually. What would be the new breakeven point in units? What would be the before-tax income or loss if 22,000 hats are sold with the new salary plan? (Do not round intermediate calculations.)

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_2

Step: 3

blur-text-image_3

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

Accounting A Comprehensive Guide For Beginners

Authors: Robert McCarthy

1st Edition

1638180474, 978-1638180470

More Books

Students also viewed these Accounting questions

Question

What are the two largest airline cost categories?

Answered: 1 week ago

Question

I had a problem last week; they would think I am picky or a whiner!

Answered: 1 week ago