The Fashion Shoe Company operates a chain of women’s shoe shops that carry many
ID: 2422680 • Letter: T
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 substantial commission on each pair of shoes sold (in addition to a small base salary) in order to encourage them to be aggressive in their sales efforts.
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 substantial commission on each pair of shoes sold (in addition to a small base salary) in order to encourage them to be aggressive in their sales efforts.
Explanation / Answer
Solution:
1 Break even point in unit sales = Fixed cost / Contribution per unit Fixed cost 223,000 Contribution per unit Sale price per pair 20 Less: Variable cost 10 Contribution per unit 10 Brek even point in units 22,300 2 Break even point in dollars = Fixed cost / P/V ratio Fixed cost 223,000 Sale price per pair 20 Less: Variable cost 10 Contribution per unit 10 p/v ratio = Contribution / sales *100 50% Break even in dollars 446,000 3 Sales - 21,900 * 20 438,000 Less: Variable cost - 10 *21900 219,000 Less: fixed cost 223,000 Net loss - 4,000 4 Break even point in unit sales = Fixed cost / Contribution per unit Fixed cost 223,000 Contribution per unit Sale price per pair 20.00 Less: Variable cost ( 10 + 0.70 ) 10.70 Contribution per unit 9.30 Brek even point in units 23,978 5 Break even point in dollars = Fixed cost / P/V ratio Fixed cost 223,000 Sale price per pair 20.00 Less: Variable cost 10.70 Contribution per unit 9.30 p/v ratio = Contribution / sales *100 47% Break even in dollars 479,570Related Questions
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