The following data contains cost and revenue data for Store # 20. These data is typical on the company’s many stores.
Per pair of shoes Selling price $ 50
Variable expenses
Invoice cost $20 Sales commission $8
Total variable expenses $ 28
Fixed expenses annual Rent $ 100,000 Advertising 200,000 Salaries 80,000
Total fixed expenses $ 380,000
Required :
1. Calculate the annual break-even point in dollar and in unit sales Break-even point in unit sales (NUMBER OF SHIRTS) shirts Break-even point in dollar sales $ ???? 2. If 20,000 pairs of shoes are sold in the year, what would be net operating income or loss? Net operating loss $????
3. The company is considering paying the store manager an incentive commission of $ 4 per pair of shoes (I addition to the sales person’s commissions) . If this change is made, what will be the new break - even point in dollar and units ?? ( use original data) New break-even point in unit sales NUMBER OF shirts New break-even point in dollar sales $ ???
4. If the company eliminated sales commissions entirely and increasing fixed salaries by $150,000 annually.
a. What will be the new break-even point in dollar sales ? NO LAYOUT THIS IS FREESTYLE b. Would you recommend that change ? Explain NO LAYOUT THIS IS FREESTYLE
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