Problem # 2:

Suppose you intend to open a franchise business to supply a nationally-known line of womens shoes. You have found a good location in Pullman to open your shop, and have determined that the average prices and costs of operating the store are:

Sales Price: $50 per pair

Variable Cost: $30 per pair

Rent: $2,500 per month

Insurance: $500 per month

Utilities: $300 per month

In addition, you plan to hire two sales associate on a commission basis, in order to provide them with incentive to sell shoes. 10% of sales price will be paid as commission. What is the breakeven point?