The HighStep Shoe Company operates a chain of shoe stores that sell 10 different styles of inexpensive mens 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. HighStep is considering opening another store that is expected to have the revenue and cost relationships shown here.

Unit Variable Data (per pair of shoes) Annual Fixed Costs

Selling Price $60 Rent $30,000

Cost of shoes 37 Salaries 100,000

Sales Commission 3 Advertising 40,000

Variable Cost per Unit 40 Other fixed costs 10,000

Total fixed costs $180,000

Consider each question independently: 1. What is the annual breakeven point in (a) units sold and (b) revenues? 2. If 8,000 units are sold, what will be the stores operating income (loss)?

3. If sales commissions are discontinued and fixed salaries are raised by a total of $15,500, what would be the annual breakeven point in (a) units sold and (b) revenues? 4. Refer to the original data. If, in addition to his fixed salary, the store manager is paid a commission of $2.00 per unit sold, what would be the annual breakeven point in (a) units sold and (b) revenues? 5. Refer to the original data. If, in addition to his fixed salary, the store manager is paid a commission of $2.00 per unit in