The Famous Shoe Company operates a chain of shoe stores that sell 10 different styles of inexpensive men's shoes with identical unit costs and selling prices. A unit is defined as a pair of shoes. Each store has a store manager who is paid a fixed salary. Individual salespeople receive a fixed salary and a sales commission. Famous is considering opening another store that is expected to have the revenue and cost relationships shown here: (Click the icon to view the revenue and cost information.) Farnous Shoe Company is considering an alternative compensation plan; one in which the sales commissions are discontinued and fixed salaries are raised by a total of $17,700. Assume the role of the owner of Famous Shoe Company Read the requirements. Requirement 1. As owner, which sales compensation plar would you choose if forecasted annual sales of the new store were at least 13,000? What do you think of the motivational aspect of your chosen compensation plan? Begin by calculating the operating income (loss) under the salary-plus-commission compensation plan. (Use parentheses or a minus sign for a loss.) Operating Income (loss) ( Now calculate the operating income (loss) under the fixed-salaries-only compensation plan. (Use parentheses or a minus sign for a loss.) Famous's operating income (loss) under the fixed-salaries-only compensation plan is s Which sales compensation plar would you choose if forecasted annual sales of the new store were at least 13,000? For an expected volume of 13,000 pairs, the owner would be inclined to choose the compensation plan because income would be Joys What do you think of the motivational aspect of your chosen compensation plan? It is likely that is determined by the nature of the compensation plan. The plan provides a greater motivation to the salespeople. Requirement 2. Suppose the target operating Income is $93.000. How many units must be sold to reach the target operating Income under (a) the original salary-plus-commissions plan and (b) the higher-fixed-salarles-only plan? Which method would you prefer? Explain briefly. Begin by calculating how many units must be sold to reach the target operating income under (a) the original salary-plus-commissions plan. (Round your answer up to the nearest whole number.) Quantity of units = required to be sold The Famous Shoe Company operates a chain of shoe stores that sell 10 different styles of inexpensive men's shoes with identical unit costs and selling prices. A unit is defined as a pair of shoes. Each store has a store manager who is paid a fixed salary. Individual salespeople receive a fixed salary and a sales commission. Famous is considering opening another store that is expected to have the revenue and cost relationships shown here: (Click the icon to view the revenue and cost information.) Famous Shoe Company is considering an alternative compensation plan; one in which the sales commissions are discontinued and fixed salaries are raised by a total of $17,700, Assume the role of the owner of Famous Shoe Company Read the requirements What do you think of the motivational aspect of your chosen compensation plan? It is likely that is determined by the nature of the compensation plan. The plan provides a greater motivation to the salespeople. Requirement 2. Suppose the target operating income is 593,000. How many units must be sold to reach the target operating income under (a) the original salary-plus-commissions plan and (b) the higher-fixed-salaries-only plan? Which method would you prefer? Explain briefly. Begin by calculating how many units must be sold to reach the target operating income under (a) the original salary-plus-commissions plan. (Round your answer up to the nearest whole number.) Quantity of units ( | = required to be sold ( Now calculate how many units must be sold to reach the target operating income under (b) the higher- fixed-salaries-only plan. (Round your answer up to nearest whole number.) The number of units Famous must sell to reach the target operating Income is units, Which method would you prefer? Explain briefly, The decision regarding the salary plan depends heavily on predictions of the salary plan offers the same target operating income of $93,000 at units. For instance, units as the commission plan offers at Requirement 3. You open the new store on January 1, 2017, with the original salary-plus-commission compensation plan in place. Because you expect the cost of the shoes to rise due to inflation, you place a firm bulk order for 14,000 shoes and lock in the $33.00 price per unit. But toward the end of the year, only 13,500 shoes are sold, and you authorize a markdown of the remaining inventory to $48 per unit. Finally, all units are sold. Salespeople, as usual, get paid a commission of 10% of revenues. What is the annual operating income for the store? (For this requirement, calculate commissions as a percent of revenues. Use parentheses or a minus sign for an operating loss.) Famous Shoe Company narstine Income Statement /mnhsiin rantribution mini The Famous Shoe Company operates a chain of shoe stores that sell 10 different styles of inexpensive men's shoes with identical unit costs and selling prices. A unit is defined as a pair of shoes. Each store has a store manager who is paid a fixed salary. Individual salespeople receive a fixed salary and a sales commission. Famous is considering opening another store that is expected to have the revenue and cost relationships shown here: E (Click the icon to view the revenue and cost information.) Famous Shoe Company is considering an alternative compensation plan; one in which the sales commissions are discontinued and fixed salaries are raised by a total of $17,700, Assume the role of the owner of Famous Shce Company. Read the requirements. 2 Now calculate how many units must be sold to reach the target operating income under (b) the higher-fixed-salaries-only plan. (Round your answer up to the nearest whole number.) The number of units Famous must sell to reach the target operating income is units. Which method would you prefer? Explain briefly. The decision regarding the salary plan depends heavily on predictions of For instance, the salary plan offers the same target operating income of $93,000 at units as the commission plan offers at units Requirement 3. You open the new store on January 1, 2017, with the original salary-plus-commission compensation plan in place. Because you expect the cost of the shoes to rise due to inflation, you place a firm bulk order for 14,000 shoes and lock in the $33.00 price per unit. But toward the end of the year, only 13,500 shoes are sold, and you authorize a markdown of the remaining inventory to $48 per unit. Finally, all units are sold. Salespeople, as usual, get paid a commission of 10% of revenues. What is the annual operating income for the store? (For this requirement, calculate commissions as a percent of revenues. Use parentheses or a minus sign for an operating loss.) Famous Shoe Company Operating Income Statement (Emphasizing Contribution Margin) For the Year Ended December 31, 2017 Operating income (loss) Data table A B C D 1 Unit Variable Data (per pair of shoes) Annual Fixed Costs 2 Selling price $ 60.00 Rent $ 25,000 3 Cost of shoes $ 33.00 Salaries 171,500 4 Sales commission 6.00 Advertising 32,000 5 Variable cost per unit 39.00 Other fixed costs 13,000 6 Total fixed costs $ 241,500 Print Done Requirements 1. As owner, which sales compensation plan would you choose if forecasted annual sales of the new store were at least 13,000? What do you think of the motivational aspect of your chosen compensation plan? 2. Suppose the target operating income is $93,000. How many units must be sold to reach the target operating income under (a) the original salary-plus-commissions plan and (b) the higher-fixed-salaries-only plan? Which method would you prefer? Explain briefly. 3. You open the new store on January 1, 2017, with the original salary-plus-commission compensation plan in place. Because you expect the cost of the shoes to rise due to inflation, you place a firm bulk order for 14,000 shoes and lock in the $33.00 price per unit. But toward the end of the year, only 13,500 shoes are sold, and you authorize a markdown of the remaining inventory to $48 per unit. Finally, all units are sold. Salespeople, as usual, get paid a commission of 10% of revenues. What is the annual operating income for the store? Print Done The Famous Shoe Company operates a chain of shoe stores that sell 10 different styles of inexpensive men's shoes with identical unit costs and selling prices. A unit is defined as a pair of shoes. Each store has a store manager who is paid a fixed salary. Individual salespeople receive a fixed salary and a sales commission. Famous is considering opening another store that is expected to have the revenue and cost relationships shown here: (Click the icon to view the revenue and cost information.) Farnous Shoe Company is considering an alternative compensation plan; one in which the sales commissions are discontinued and fixed salaries are raised by a total of $17,700. Assume the role of the owner of Famous Shoe Company Read the requirements. Requirement 1. As owner, which sales compensation plar would you choose if forecasted annual sales of the new store were at least 13,000? What do you think of the motivational aspect of your chosen compensation plan? Begin by calculating the operating income (loss) under the salary-plus-commission compensation plan. (Use parentheses or a minus sign for a loss.) Operating Income (loss) ( Now calculate the operating income (loss) under the fixed-salaries-only compensation plan. (Use parentheses or a minus sign for a loss.) Famous's operating income (loss) under the fixed-salaries-only compensation plan is s Which sales compensation plar would you choose if forecasted annual sales of the new store were at least 13,000? For an expected volume of 13,000 pairs, the owner would be inclined to choose the compensation plan because income would be Joys What do you think of the motivational aspect of your chosen compensation plan? It is likely that is determined by the nature of the compensation plan. The plan provides a greater motivation to the salespeople. Requirement 2. Suppose the target operating Income is $93.000. How many units must be sold to reach the target operating Income under (a) the original salary-plus-commissions plan and (b) the higher-fixed-salarles-only plan? Which method would you prefer? Explain briefly. Begin by calculating how many units must be sold to reach the target operating income under (a) the original salary-plus-commissions plan. (Round your answer up to the nearest whole number.) Quantity of units = required to be sold The Famous Shoe Company operates a chain of shoe stores that sell 10 different styles of inexpensive men's shoes with identical unit costs and selling prices. A unit is defined as a pair of shoes. Each store has a store manager who is paid a fixed salary. Individual salespeople receive a fixed salary and a sales commission. Famous is considering opening another store that is expected to have the revenue and cost relationships shown here: (Click the icon to view the revenue and cost information.) Famous Shoe Company is considering an alternative compensation plan; one in which the sales commissions are discontinued and fixed salaries are raised by a total of $17,700, Assume the role of the owner of Famous Shoe Company Read the requirements What do you think of the motivational aspect of your chosen compensation plan? It is likely that is determined by the nature of the compensation plan. The plan provides a greater motivation to the salespeople. Requirement 2. Suppose the target operating income is 593,000. How many units must be sold to reach the target operating income under (a) the original salary-plus-commissions plan and (b) the higher-fixed-salaries-only plan? Which method would you prefer? Explain briefly. Begin by calculating how many units must be sold to reach the target operating income under (a) the original salary-plus-commissions plan. (Round your answer up to the nearest whole number.) Quantity of units ( | = required to be sold ( Now calculate how many units must be sold to reach the target operating income under (b) the higher- fixed-salaries-only plan. (Round your answer up to nearest whole number.) The number of units Famous must sell to reach the target operating Income is units, Which method would you prefer? Explain briefly, The decision regarding the salary plan depends heavily on predictions of the salary plan offers the same target operating income of $93,000 at units. For instance, units as the commission plan offers at Requirement 3. You open the new store on January 1, 2017, with the original salary-plus-commission compensation plan in place. Because you expect the cost of the shoes to rise due to inflation, you place a firm bulk order for 14,000 shoes and lock in the $33.00 price per unit. But toward the end of the year, only 13,500 shoes are sold, and you authorize a markdown of the remaining inventory to $48 per unit. Finally, all units are sold. Salespeople, as usual, get paid a commission of 10% of revenues. What is the annual operating income for the store? (For this requirement, calculate commissions as a percent of revenues. Use parentheses or a minus sign for an operating loss.) Famous Shoe Company narstine Income Statement /mnhsiin rantribution mini The Famous Shoe Company operates a chain of shoe stores that sell 10 different styles of inexpensive men's shoes with identical unit costs and selling prices. A unit is defined as a pair of shoes. Each store has a store manager who is paid a fixed salary. Individual salespeople receive a fixed salary and a sales commission. Famous is considering opening another store that is expected to have the revenue and cost relationships shown here: E (Click the icon to view the revenue and cost information.) Famous Shoe Company is considering an alternative compensation plan; one in which the sales commissions are discontinued and fixed salaries are raised by a total of $17,700, Assume the role of the owner of Famous Shce Company. Read the requirements. 2 Now calculate how many units must be sold to reach the target operating income under (b) the higher-fixed-salaries-only plan. (Round your answer up to the nearest whole number.) The number of units Famous must sell to reach the target operating income is units. Which method would you prefer? Explain briefly. The decision regarding the salary plan depends heavily on predictions of For instance, the salary plan offers the same target operating income of $93,000 at units as the commission plan offers at units Requirement 3. You open the new store on January 1, 2017, with the original salary-plus-commission compensation plan in place. Because you expect the cost of the shoes to rise due to inflation, you place a firm bulk order for 14,000 shoes and lock in the $33.00 price per unit. But toward the end of the year, only 13,500 shoes are sold, and you authorize a markdown of the remaining inventory to $48 per unit. Finally, all units are sold. Salespeople, as usual, get paid a commission of 10% of revenues. What is the annual operating income for the store? (For this requirement, calculate commissions as a percent of revenues. Use parentheses or a minus sign for an operating loss.) Famous Shoe Company Operating Income Statement (Emphasizing Contribution Margin) For the Year Ended December 31, 2017 Operating income (loss) Data table A B C D 1 Unit Variable Data (per pair of shoes) Annual Fixed Costs 2 Selling price $ 60.00 Rent $ 25,000 3 Cost of shoes $ 33.00 Salaries 171,500 4 Sales commission 6.00 Advertising 32,000 5 Variable cost per unit 39.00 Other fixed costs 13,000 6 Total fixed costs $ 241,500 Print Done Requirements 1. As owner, which sales compensation plan would you choose if forecasted annual sales of the new store were at least 13,000? What do you think of the motivational aspect of your chosen compensation plan? 2. Suppose the target operating income is $93,000. How many units must be sold to reach the target operating income under (a) the original salary-plus-commissions plan and (b) the higher-fixed-salaries-only plan? Which method would you prefer? Explain briefly. 3. You open the new store on January 1, 2017, with the original salary-plus-commission compensation plan in place. Because you expect the cost of the shoes to rise due to inflation, you place a firm bulk order for 14,000 shoes and lock in the $33.00 price per unit. But toward the end of the year, only 13,500 shoes are sold, and you authorize a markdown of the remaining inventory to $48 per unit. Finally, all units are sold. Salespeople, as usual, get paid a commission of 10% of revenues. What is the annual operating income for the store? Print Done
