Shirts unlimited operates a chain of shirt shops around the country. The shops carry many styles of shirts that are all sold at the same price. Sales personnel in the shops are paid a substantial commission on each shirt sold (in addition to a small basic salary) in order to encourage them to be aggressive in their sale efforts.

The following worksheet contains cost and revenue data for shop 6 and is typical of the company's many outlets

Per shirt

Sales Price- $40.00

Variable Expenses:

Invoice Cost- $18.00

Sales Commission- $7.00

Annual fixed expenses:

rent- $80,000

Advertising- $150,000

Salaries- $70,000

Required to answer:

1) Calculate the annual break-even point in dollar sales and in unit sales for shop 36.

2) if 19,000 shirts are sold in a year, what would be shop 36's net operating income or loss?

3) The company is considering paying the store manager of shop 6 an incentive commission of $3 per shirt in addition to the regular commission. If this change is made, what will be the new breakeven point in dollar sales and in unit sales?