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 $ 9.50

Sales commission 5.50

Total variable expenses $ 15.00

Annual Fixed expenses:

Advertising $ 36,000

Rent 23,000 Salaries 130,000

Total fixed expenses $ 189,000

5. Refer to the original data. As an alternative to (4) above, the company is considering paying the Shop 48 store manager 50 cents commission on each pair of shoes sold in excess of the break-even point. If this change is made, what will be Shop 48's net operating income (loss) if 15,700 pairs of shoes are sold?

Net Operating Income: