Question

If I could please HAVE help answering this question.

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 Selling price $ 40.00 Variable expenses: Invoice cost $ 16.00 Sales commission 4.00 Total variable expenses $ 20.00 Annual Fixed expenses: Advertising $ 45,000 Rent 31,000 Salaries 155,000 Total fixed expenses $ 231,000 1A) What is Shop 48's annual break-even point in unit sales and dollar sales? 1B)If 11,050 pairs of shoes are sold in a year, what would be Shop 48’s net operating income (loss)? 1) the company is considering paying the Shop 48 store manager 55 cents commission 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 income (loss) if 13,550 pairs of shoes are sold? (Do not round intermediate calculations.)

Answer 1

annual break. even point ( A Shop's 48 s dollars - Cin units) Total Fixed tapenses - $ 2310 For $40 $20 selling price= Total variable expense = contribution margin = $20 fiäed Expense Break-even point in Units = contobution Margin 923160 $20 A 11550 units. 1 Pairs) Us To units X SP Break - den point in dollars - 11550 units X yo - $452,000 IB) of 11.050 pairs of shoes Total 44200 Perunit ya 22100 20 20 221 800 sales Revenue [ uox 11050) variable expense C 20x11050) contribution margin Fixed expenie operating (Loss) 23102 (10,0 )

- 1) of company is consideor. Total Sale Revence c 13.550 X 40) for unit 40 54200 272100 20.08 Variable expense - Contribution Crefer win) Morgin 269 gow 119.92 Capo fined expense 231,00 38 900 operating profit WIN! = No of units sold Break even points excen units sold 13550 11 STO 2004 manager commission 200 X a.st = $1100 Variable expense : 2710W 13.550 X 20 - (t) = variable cost Manager Coman Total 272.100