Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

[The following information applies to the questions displayed below.] The Fashion Shoe Company operates a chain of women's shoe shops that carry many styles of

image text in transcribed

[The following information applies to the questions displayed below.] The Fashion Shoe Company operates a chain of women's 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 company's many outlets: Per Pair of Shoes $ 30.00 Selling price Variable expenses: Invoice cost Sales commission Total variable expenses $ 11.00 4.00 $15.00 Annual Fixed expenses: Advertising Rent Salaries Total fixed expenses $ 40,000 31,000 175,000 $ 246,000 Required: 1. What is Shop 48's annual break-even point in unit sales and dollar sales? (Do not round intermediate calculations.) pairs Break-even point in unit sales Break-even point in dollar sales B. If 15,500 pairs of shoes are sold in a year, what would be Shop 48's net operating income (loss)? 4. The company is considering paying the Shop 48 store manager an incentive commission of 75 cents per pair of shoes (in addition to the salesperson's commission). If this change is made, what will be the new break-even point in unit sales and dollar sales? (Do not round intermediate calculations. Round your final answers to the nearest whole number.) pairs New break-even point in unit sales New break-even point in dollar sales Refer to the original data. As an alternative to (4) above, the company is considering paying the Shop 48 store manager 50 cents ommission 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 ncome (loss) if 18,800 pairs of shoes are sold? (Do not round intermediate calculations.) 6. Refer to the original data. The company is considering eliminating sales commissions entirely in its shops and increasing fixed salaries by $33,300 annually. If this change is made, what will be Shop 48's new break-even point in unit sales and dollar sales? (Do not round intermediate calculations.) pairs New break-even point in unit sales New break-even point in dollar sales

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Management Measuring Monitoring And Motivating Performance

Authors: Leslie G. Eldenburg, Susan K. Wolcott

2nd Edition

978-0-470-7694, 0470769424, 978-0470769423

Students also viewed these Accounting questions