Question

The Fashion Shoe Company operates a chain of women's shoe shops around the country. The shops carry many styles of shoes that are all sold at the same price. Sales personnel in the shops are paid a substantial commission on the following pair of shoes sold (in addition to a small basic salary) in order to encourage them to be aggressive in their sales efforts.The following worksheet contains cost and revenue data for Shop 48 and is typical of the company's many outlets.
(c) If 12,000 pairs of shoes are sold in a year, what would be Shop 48's net operating income or loss?

Answer 1

The computation of the break-even point (in dollars) is given below:

Break-even (dollars) = Break-even (units) x Selling price

=  $10 x 12,000 units

= 120,000

Based on the data given in the problem, compute the revised break-even point (in units) for shop 48 after the payment of the incentive.

The break-even point is the point at which total costs equal total sales, and there is no loss or profit for a small business. This means that we have reached a stage of production where the cost of production equals the revenue of the product.

The break-even point is used in several areas of economics and finance. In accounting terms, it refers to the level of production where the total revenue from production equals the total cost of production.

Learn more about the break-even point at

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