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The Walking Shoe Company operates a chain of shoe stores. The stores sell ten different styles of inexpensive men's shoes with identical unit costs
The Walking Shoe Company operates a chain of shoe stores. The stores sell ten different styles of inexpensive men's 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. Walking is trying to determine the desirability of opening another store, which is expected to have the following revenue and cost relationships: (Click the icon to view the revenue and cost information.) Required (Round breakeven units and revenues up to the nearest whole number and round all calculations to the nearest whole number.) Requirement 1 Determine the formula to calculate the breakeven units. Breakeven point in units Total fixed costs Contribution margin per unit (a) Using the current values, calculate the annual breakeven point in units sold. (Round your answer un to the nearest whole unit units sold to break even. Required Help me solve this Etext pages Get more help Requirements (Consider each question independently.) 1. What is the annual breakeven point in (a) units sold and (b) revenues? 2. If 32,000 units are sold, what will be the store's operating income (loss)? 3. If sales commissions were discontinued for individual salespeople in favour of an $84,000 increase in fixed salaries, what would be the annual breakeven point in (a) units sold and (b) revenues? 4. Refer to the original data. If the store manager were paid $0.40 per unit sold in addition to his current fixed salary, what would be the annual breakeven point in (a) units sold and (b) revenues? 5. Refer to the original data. If the store manager were paid $0.40 per unit commission on each unit sold in excess of the breakeven point, what would be the store's operating income if 59,000 units were sold? (This $0.40 is in addition to both the commission paid to the sales staff and the store manager's fixed salary.) Data table Selling price $ 34.00 Unit variable cost per pair: Cost of shoes $ 18.50 3.50 Sales commissions $ 22.00 Total variable costs Annual fixed costs: Rent $ 66,000 Salaries 207,000 Advertising 81,000 28,000 Other fixed costs $ 382,000 Total fixed costs Print Done Clear all Check answer
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