blouses in Washington, USA. Blouses are imported from Pakistan and are sold to customers in Washington at a profit. Salespersons are paid basic salary plus a decent commission of $14 on each sale made by them. Sellin
blouses in Washington, USA. Blouses are imported from Pakistan and are sold to customers in Washington at a profit. Salespersons are paid basic salary plus a decent commission of $14 on each sale made by them. Sellin
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints
Section: Chapter Questions
Problem 7E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...
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Beta company sells blouses in Washington, USA. Blouses are imported from Pakistan and are sold to customers in Washington at a profit. Salespersons are paid basic salary plus a decent commission of $14 on each sale made by them. Selling price and expense data is given below:
Selling Price $80.00
Variable Costs
Invoice $36
Commission $14
Total Variable $50
Annualized Fixed
Rent $160,000
marketing $300,000
Salaries $140,000
Total Fixed $600,000
- Compute the break-even point in units and in dollars using the information given above.
- Prepare a CVP graph (break-even chart) and show the break-even point on the graph.
- What would be net operating income or loss if company sells 18,500 blouses in a year?
- If the manage is paid a commission of $6 blouse (in addition to the salesperson’s commission), what will be the effect on company’s break-even point?
- As an alternative to (3) above, company is thinking to pay $6 commission to manager on each blouse sold in excess of break-even point. What will be the effect of these changes on the net operating income or loss of the Beta company if 23,500 blouses are sold in a year?
- Refer to the original data. What will be the break-even point of the company if commission is entirely eliminated and salaries are increased by $214,000?
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