Question
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.
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 $ 20.00 Variable expenses: Invoice cost $ 5.00 Sales commission 5.00 Total variable expenses $ 10.00 Annual Fixed expenses: Advertising $ 36,000 Rent 25,000 Salaries 125,000 Total fixed expenses $ 186,000 4. The company is considering paying the Shop 48 store manager an incentive commission of 70 cents per pair of shoes (in addition to the salespersons commission). If this change is made, what will be the new break-even point in unit sales and dollar sales?
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