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Assessment Task A. The XYZ Shoe Company operates a chain of shoe stores that sell 10 different styles of men's shoes with identical unit costs and selling prices. A unit is defined as a pair of shoes. Each store has a store manager who is paid a fixed salary. Individual salespeople receive a fixed salary and a sales commission. XYZ is considering opening another store that is expected to have the revenue and cost relationship shown here: Unit Variable Data (per pair of shoes) Selling price Cost of shoes Sales commission Variable cost per unit Annual Fixed Costs P3,000.00 Rent 2,300.00 Salaries 100.00 Advertising P2,400.00 Other fixed cost P 600,000 2,000,000 800,000 200,000 3,600,000 Total fixed costs 1. What is the annual breakeven point in (a) units sold and (b) revenues? 2. If 5,000 units are sold, what will be the store's operating income (loss)? 3. If sales commissions are discontinued and fixed salaries are raised by a total of P810,000, what would be the annual breakeven point in (a) units sold and (b) revenues?

Assessment Task A. The XYZ Shoe Company operates a chain of shoe stores that sell 10 different styles of men's shoes with identical unit costs and selling prices. A unit is defined as a pair of shoes. Each store has a store manager who is paid a fixed salary. Individual salespeople receive a fixed salary and a sales commission. XYZ is considering opening another store that is expected to have the revenue and cost relationship shown here: Unit Variable Data (per pair of shoes) Selling price Cost of shoes Sales commission Variable cost per unit Annual Fixed Costs P3,000.00 Rent 2,300.00 Salaries 100.00 Advertising P2,400.00 Other fixed cost P 600,000 2,000,000 800,000 200,000 3,600,000 Total fixed costs 1. What is the annual breakeven point in (a) units sold and (b) revenues? 2. If 5,000 units are sold, what will be the store's operating income (loss)? 3. If sales commissions are discontinued and fixed salaries are raised by a total of P810,000, what would be the annual breakeven point in (a) units sold and (b) revenues?

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter7: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 46E: Lotts Company produces and sells one product. The selling price is 10, and the unit variable cost is...
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Assessment Task A. The XYZ Shoe Company operates a chain of shoe stores that sell 10 different styles of men's shoes with identical unit costs and selling prices. A unit is defined as a pair of shoes. Each store has a store manager who is paid a fixed salary. Individual salespeople receive a fixed salary and a sales commission. XYZ is considering opening another store that is expected to have the revenue and cost relationship shown here: Unit Variable Data (per pair of shoes) Selling price Cost of shoes Annual Fixed Costs P3,000.00 Rent 2,300.00 Salaries 100.00 Advertising P2,400.00 Other fixed cost P 600,000 2,000,000 800,000 200,000 P3,600,000 Sales commission Variable cost per unit Total fixed costs 1. What is the annual breakeven point in (a) units sold and (b) revenues? 2. If 5,000 units are sold, what will be the store's operating income (loss)? 3. If sales commissions are discontinued and fixed salaries are raised by a total of P810,000, what would be the annual breakeven point in (a) units sold and (b) revenues? 4. Refer to the original data. If in addition to his fixed salary, the store manager is paid a commission of P30 per unit in excess of the break-even point, what would be the store's operating income if 10,000 units were sold.
Transcribed Image Text:Assessment Task A. The XYZ Shoe Company operates a chain of shoe stores that sell 10 different styles of men's shoes with identical unit costs and selling prices. A unit is defined as a pair of shoes. Each store has a store manager who is paid a fixed salary. Individual salespeople receive a fixed salary and a sales commission. XYZ is considering opening another store that is expected to have the revenue and cost relationship shown here: Unit Variable Data (per pair of shoes) Selling price Cost of shoes Annual Fixed Costs P3,000.00 Rent 2,300.00 Salaries 100.00 Advertising P2,400.00 Other fixed cost P 600,000 2,000,000 800,000 200,000 P3,600,000 Sales commission Variable cost per unit Total fixed costs 1. What is the annual breakeven point in (a) units sold and (b) revenues? 2. If 5,000 units are sold, what will be the store's operating income (loss)? 3. If sales commissions are discontinued and fixed salaries are raised by a total of P810,000, what would be the annual breakeven point in (a) units sold and (b) revenues? 4. Refer to the original data. If in addition to his fixed salary, the store manager is paid a commission of P30 per unit in excess of the break-even point, what would be the store's operating income if 10,000 units were sold.
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