Question

Sun Sports Inc. has several kiosks in large and medium-sized shopping malls selling various styles of men's and women's sports hats, all at the same price. In addition to the regular salary, the company pays a good commission to its salespeople in order to be diligent and proactive in sales. The following selling price and cost information is representative of each of the kiosks individually. Data per Hats. Sales Price $20 Variable Cost Cost per hat $9 Sales Commission $3.50 Total Variable Cost $12.50 Anual Cost Fixed Costs Salaries $35,000 Kiosk Rental $24,000 Advertising $50,000 Total Fixed Costs $109,000 The company wants to review its policies and provide additional incentives to boost sales. Provides management with the following analysis of its stores: 1. Find the breakeven point in units and dollars of sale of a kiosk. (10 points) 2. Prepare a cost-volume-profit graph that shows the revenues and costs of a kiosk from 0 to 15,000 hats and the breakeven point. (5 points) 3. Present the net operating results (net profit or loss) if 9,000 hats are sold per year. (10 points) 4. The company is evaluating the possibility of offering a commission of $ 1.50 per hat sold to the kiosk supervisor (in addition to the sales commissions paid to vendors at the kiosk). Determine the new breakeven point in sales dollars and units sold if this commission is added. (5 points) 5. Instead of the commission of $ 1.50 per hat sold above, another alternative that the company wishes to evaluate is to offer the supervisor only $ 1.50 for each hat sold in excess of the breakeven point. If only this commission is applied, what would the net operating result (net profit or loss) be if 12,000 hats are sold per year? (10 points) 6. Another third alternative, in lieu of the above, is to eliminate sales commissions entirely and increase fixed salaries by an additional $ 15,500 annually. to. It presents the breakeven point in dollars and units of sale for this alternative. (5 points) b. Explain whether or not you would recommend this alternative and why. (5 points). You must present the answer to the exercise completely and with the whole process to perform the calculations.

Answer 1

2014 nuary Saturday 25 S100 366000 salevalle 9.00 328000 10.00 300000 290 680 Totalcast 11.00 rfoooo 12.00 226000 1.00 20000 181675 2.000 2.00 Varis lexost 3.00 Scott 20 4.00 125000 5.00 10 4000 LOD DOO Finec а Cost 6.00 5000 7.00 50000 8.00 Notes: 2.500 Sono roo 14524 12000

Week 05 January Tuesday 201 28 028-337 8.00 but the break even calec these information given 145 uunite based on 9.00 problem 10.00 Statement of Net profit cor loss 11.00 12.00 Amount 1.00 200 000 $ (50000) 3.00 Particulars sales (12000X 20) 2.00 less:- Variable cost (12000x 12:50) contribution Tessi- Fixed cost Profit Kloss) 90ooo 4.00 5.00 (109000) (19.000) 6.00 7.00 Net locs when 12000 hats sold 190004 Notes :