Loose Leaf For Introduction To Managerial Accounting
8th Edition
ISBN: 9781260190175
Author: Brewer Professor, Peter C.; Garrison, Ray H; Noreen, Eric
Publisher: McGraw-Hill Education
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Question
Chapter 6, Problem 26P
To determine
1. The Break-even point in unit sales and dollar sales.
2. Preparing CVP graph.
3. The net operating income (loss).
4. The new break-even point in unit sales and dollar sales.
5. The net operating income
6. The new break-even point in unit sales and dollar sales and recommendation.
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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
$ 20.00
Selling price
Variable expenses:
Invoice cost
Sales commission
Total variable expenses
Fixed expenses:
Advertising
Rent
Salaries.
Total fixed expenses
$ 6.50
5.50
$12.00
Annual
New break-even point in unit sales
New break-even point in dollar sales
$ 42,000
32,000
160,000
$ 234,000
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? (Do not
round…
The following information applies to the questions displayed below.]
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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.
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The following data pertains to Shop 48 and is typical of the company’s many outlets:
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Per Pair of Shoes
Selling price
$ 25.00
Variable expenses:
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Invoice cost
$ 11.50
Sales commission
3.50
Total variable expenses
$ 15.00
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Annual
Fixed expenses:
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Advertising
$ 32,000
Rent
17,000
Salaries
110,000
Total fixed expenses
$ 159,000
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6. Refer to the original data. The company is considering eliminating sales commissions entirely in its shops and increasing fixed salaries by $35,400 annually. If this change is made, what will be Shop 48's new break-even point in unit sales and dollar sales? (Do not round intermediate calculations.)
[The following information applies to the questions displayed below.]
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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.
Â
The following data pertains to Shop 48 and is typical of the company’s many outlets:
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Â
Per Pair of Shoes
Selling price
$ 25.00
Variable expenses:
Â
Invoice cost
$ 11.50
Sales commission
3.50
Total variable expenses
$ 15.00
Â
Annual
Fixed expenses:
Â
Advertising
$ 32,000
Rent
17,000
Salaries
110,000
Total fixed expenses
$ 159,000
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Required:
1. What is Shop 48's annual break-even point in unit sales and dollar sales? (Do not round intermediate calculations.)
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Break-even point in unit sales
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pairs
Break-even point in dollar sales
Chapter 6 Solutions
Loose Leaf For Introduction To Managerial Accounting
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