Question

Let's say you want to open a shoe store that will specialize in high-end shoes. But before you do, you want to determine how many pairs of shoes you have sell in the first year to break even (have no profit or loss). You also want to know what your profit will be in year two. You have been busy estimating some revenues and costs. Here is what you have so far: Cost (to you) per pair of shoes $80, Sales commission per pair of shoes $10, Salaries $420,000, Rent $120,000, Cost to you per pair of shoes $80, Advertising $20,000, Commission paid per pair of shoes $10, Insurance $16,000, Miscellaneous fixed costs $24,000, Selling price per pair of shoes $160. If you end up selling 12,000 pairs of shoes the first year, how much profit will you make?

Answer 1

Answer:

$240,000

Explanation:

Selling price per pair of shoes $160 x 12,000 ...1,920,000

Cost (to you) per pair of shoes $80 x 12,000 .... $960,000

Sales commission per pair  $10 x 12,000..........    $120,000

Salaries ..........................................................................$420,000

Rent................................................................................ $120,000,

Advertising..................................................................... $20,000,

Insurance .........................................................................$16,000,

Miscellaneous fixed costs ..........................................$24,000,

Profit ..............................................................................$240,000