Question

Question one: part one:

Required information

[The following information applies to the questions displayed below.]

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

Required:

1. What is Shop 48's annual break-even point in unit sales and dollar sales? (Do not round intermediate calculations.)

Question one: part two:

Required information

[The following information applies to the questions displayed below.]

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

3. If 11,050 pairs of shoes are sold in a year, what would be Shop 48’s net operating income (loss)?

Answer 1