Required information

Problem 5-26 (Static) CVP Applications; Break-Even Analysis; Graphing [LO5-1, LO5-2, LO5-4, LO5-5]

Skip to question

[The following information applies to the questions displayed below.]

The Fashion Shoe Company operates a chain of womens shoe shops that carry many styles of shoes that are all sold at the same price. Sales personnel in the shops are paid a sales commission on each pair of shoes sold plus a small base salary.

The following data pertains to Shop 48 and is typical of the companys many outlets:

	Per Pair of Shoes
Selling price	$ 30.00
Variable expenses:
Invoice cost	$ 13.50
Sales commission	4.50
Total variable expenses	$ 18.00

	Annual
Fixed expenses:
Advertising	$ 30,000
Rent	20,000
Salaries	100,000
Total fixed expenses	$ 150,000

Problem 5-26 (Static) Part 2

2. Prepare a CVP graph showing cost and revenue data for Shop 48 from zero shoes up to 17,000 pairs of shoes sold each year. Clearly indicate the break-even point on the graph. (Use the line tool to draw a single line (Total Sales, Fixed Expense, Total Expense). This line should only contain the two endpoints. Use the point tool (Break Even Point) to plot the Break Even Point. For your graph to grade correctly, you must enter the exact x and y coordinates for each endpoint. Once all points have been plotted, click on the line (not individual points) and a tool icon will pop up. You can use this to enter exact co-ordinates for your points as needed. To remove a line/point from the graph, click on the line/point and select delete option.)