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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 $ 30.0e Selling price Variable expenses: Invoice cost Sales commission $13.5e 4.50 $18.00 Annual Total variable expenses Fixed expenses: Advertising Rent Salaries $. 30,000 20,9ee 100,e0e $150,000 Total fixed expensesRequired: 1. What is Shop 48s annual break-even point in unit sales and dollar sales? (Do not round intermediate calculations.) Break-even point in unit sales Break-even point in dollar sales pairs3. If 12,000 pairs of shoes are sold in a year, what would be Shop 48s 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 salespersons 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.) New break-even point in unit sales pairs New break-even point in dollar sales

5. Refer to the original data. As an alternative to (4) above, the company is considering paying the Shop 48 store manager 50 cents commission on each pair of shoes sold in excess of the break-even point. If this change is made, what will be Shop 48s net operating income (loss) if 15,000 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 $31,500 annually. If this change is made, what will Shop 48s new break-even point in unit sales and dollar sales? (Do not round intermediate calculations.) New break-even point in unit sales pairs New break-even point in dollar sales

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1. Break-even point in unit sala Foxroula Bxeak -even point lBep) - fixed cost Contribution Moueh Ra unit Vakiable ust per unit $12. 4 12 unit prie poin t12,000 pours of shoes aU- sold in a year Net operating income los) Salex C12000 x3o) b) Vasiable lost Invoice cast3 Sales commision 16,000 IS fired Cosh Iso,000 loss6o00 An incentive cornríssion ot. t5% per pan ot shoes shoe. so vauiable expenves Invoice cost 13.SD salus commissions incundive tanml t o Ts sionBaeabEven point (BEP unit)-hed cost Paie petunit Vaxiabe cost pa uwt IS0,000 30 I Ts Is0,o00 11.25 Break Even point sales 8ep uvit x Selling paste per unt Bep unit x selling pice fel 13,333 33 30 311,999 , q(本4,00,000 approx = uuirg Ihcawelloxs gals ISDOO x30) Net operating neome llosS 4 60,000 t Vaiable expense Invoice cost 13AS Sales commiusn Ys so canta) 18:5 e Fxed cost Not Operating Snove→ 22 lsoo30 -13.S 31sooo 16.5 19,090 paiuy eep Sales 19,090x 30

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