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 $ 19.50 Sales commission 4.50 Total variable expenses $ 24.00 Annual Fixed expenses: Advertising $ 38,000 Rent 28,000 Salaries 140,000 Total fixed expenses $ 206,000 Problem 5-26 Part 4 4. The company is considering paying the Shop 48 store manager an incentive commission of 80 cents per pair of shoes (in addition to the salesperson’s commission). If this change is made, what will be the new break-even point in unit sales and dollar sales?

Answer 1

Soli. 40.00 Selling price per pair Losr: Variable cost per pair: - Anvoice cost Sales Commission Incentive commision 19.50 4.50 0.80 24.00 Contribution per paino 15:2 plu Patio , Sales price - Varblecast on Sales price $40 - $24.8 vlod $40 $15.2 x 100 $40 2 38% poolit Volume Ratio Plv Ratio ,

Break-even Sales (in dollar) Fired cost Plv Ratio Break-even Sales (in unit) $206000 38% = $ 5,4-2,1055 26 Break-even Sales Lindoll.co) Selling price per paio (unit) $ 5,42,1026 13552-63 $40 j 13,552 pair (unit)