Question

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 $ 30.00 Variable expenses: Invoice cost $ 8.00 Sales commission 7.00 Total variable expenses $ 15.00 Annual Fixed expenses: Advertising $ 35,000 Rent 30,000 Salaries 145,000 Total fixed expenses $ 210,000 6. Refer to the original data. The company is considering eliminating sales commissions entirely in its shops and increasing fixed salaries by $38,600 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.)

Answer 1

Shop 48's new break-even point in unit sales is 14,000 units and dollar sales is $420,000.

Break even point in units and sales

Break even point in units sales

Break even point= Fixed cost /Contribution per units

Break even point=$210,000/ ($30-15)

Break even point=$210,000/ $15

Break even point=14,000 units

Break even point in dollar sales:

Break even point in dollar sales =14,000 ×$30

Break even point in dollar sales=$420,000

Therefore Shop 48's new break-even point in unit sales is 14,000 units and dollar sales is $420,000.

Learn more about break even point in units and sales here:brainly.com/question/15281855

#SPJ1