The Walker Shoe Company operates a chain of shoe stores. The store sells 10 different styles of inexpensive men's shoes with identical Unit cost 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 Salesperson receives sales commission and a fixed salary. The company is trying To determine Whether To open another store, which is expected to have the following revenue and cost relationship:

Unit Variable data ( per pair of shoes)

Selling Price. $45.00

Cost of shoes. $33.50

Sales Commission. 2.40

Variable Cost per Unit. $35.90

Annual Fixed Cost:

Rent. $60,000

Salaries. 200,000

Advertising 80,000

Other fixed costs 20,000

Total fixed cost. $360,000

Required:

1. Given the information above, (A) what is the annual break even point in units sold and (b) the break even point in revenue dollars?

2. If sales Commission were discontinued for individual salesperson in favor of a $95,000 increase in fixed salaries, what would be the annual breakeven point in units sold?

3. At what level os sales units should the firm be indifferent between The compensation polar in the orgin Al data and the new compensations plan described in (2).

4. Refer to your answer in (3), If sales are expected to be 45,000 units which compensation plan should be chosen> Explain your answer And provide supporting calculations.

5. Refer to the original data. If the new store must earn an after - tax profit of at least $100,000 and the corporate tax rate is 35%, what should be the selling price per unit if sales are expected to be 45,000 units?