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3-43 CVP analysis, shoe stores. The HighStep Shoe Company operates a chain of shoe stores that sell 10 different styles of inexpensive men's shoes with identical unit costs and selling prices. A unit is defined as a pair of shoes. Each store has a store manager who is paid a fixed salary. Individual salespeople receive a fixed salary and a sales commission. HighStep is considering opening another store that is expected to have the revenue and cost relationships shown here. View Review Data Formulas Home Page Layout Insert C D E В A Annual Fixed Costs Unit Variable Data (per pair of shoes) 1 $60.00 Rent $ 30,000 2 Selling price $37.00 Salaries 3 Cost of shoes Sales commission 100,000 Advertising Other fixed costs 3.00 40,000 $40.00 5 Variable cost per unit 10,000 Total fixed costs $180,000 6 Consider each question independently. 1. What is the annual breakeven point in (a) units sold and (b) revenues? 2. If 8,000 units are sold, what will be the store's operating income (loss)? 3. If sales commissions are discontinued and fixed salaries are raised by a total of $15,500, what would be the annual breakeven point in (a) units sold and (b) revenues? 4. Refer to the original data. If, in addition to his fixed salary, the store manager is paid a commission of $2.00 per unit sold, what would be the annual breakeven point in (a) units sold and (b) revenues? 5. Refer to the original data. If, in addition to his fixed salary, the store manager is paid a commission of $2.00 per unit in excess of the breakeven point,what would be the store's operating income if 12,000 units were sold? 4

3-43 CVP analysis, shoe stores. The HighStep Shoe Company operates a chain of shoe stores that sell 10 different styles of inexpensive men's shoes with identical unit costs and selling prices. A unit is defined as a pair of shoes. Each store has a store manager who is paid a fixed salary. Individual salespeople receive a fixed salary and a sales commission. HighStep is considering opening another store that is expected to have the revenue and cost relationships shown here. View Review Data Formulas Home Page Layout Insert C D E В A Annual Fixed Costs Unit Variable Data (per pair of shoes) 1 $60.00 Rent $ 30,000 2 Selling price $37.00 Salaries 3 Cost of shoes Sales commission 100,000 Advertising Other fixed costs 3.00 40,000 $40.00 5 Variable cost per unit 10,000 Total fixed costs $180,000 6 Consider each question independently. 1. What is the annual breakeven point in (a) units sold and (b) revenues? 2. If 8,000 units are sold, what will be the store's operating income (loss)? 3. If sales commissions are discontinued and fixed salaries are raised by a total of $15,500, what would be the annual breakeven point in (a) units sold and (b) revenues? 4. Refer to the original data. If, in addition to his fixed salary, the store manager is paid a commission of $2.00 per unit sold, what would be the annual breakeven point in (a) units sold and (b) revenues? 5. Refer to the original data. If, in addition to his fixed salary, the store manager is paid a commission of $2.00 per unit in excess of the breakeven point,what would be the store's operating income if 12,000 units were sold? 4

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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3-43 CVP analysis, shoe stores. The HighStep Shoe Company operates a chain of shoe stores that sell 10 different styles of inexpensive men's shoes with identical unit costs and selling prices. A unit is defined as a pair of shoes. Each store has a store manager who is paid a fixed salary. Individual salespeople receive a fixed salary and a sales commission. HighStep is considering opening another store that is expected to have the revenue and cost relationships shown here. View Review Data Formulas Home Page Layout Insert C D E В A Annual Fixed Costs Unit Variable Data (per pair of shoes) 1 $60.00 Rent $ 30,000 2 Selling price $37.00 Salaries 3 Cost of shoes Sales commission 100,000 Advertising Other fixed costs 3.00 40,000 $40.00 5 Variable cost per unit 10,000 Total fixed costs $180,000 6 Consider each question independently. 1. What is the annual breakeven point in (a) units sold and (b) revenues? 2. If 8,000 units are sold, what will be the store's operating income (loss)? 3. If sales commissions are discontinued and fixed salaries are raised by a total of $15,500, what would be the annual breakeven point in (a) units sold and (b) revenues? 4. Refer to the original data. If, in addition to his fixed salary, the store manager is paid a commission of $2.00 per unit sold, what would be the annual breakeven point in (a) units sold and (b) revenues? 5. Refer to the original data. If, in addition to his fixed salary, the store manager is paid a commission of $2.00 per unit in excess of the breakeven point,what would be the store's operating income if 12,000 units were sold? 4
Transcribed Image Text:3-43 CVP analysis, shoe stores. The HighStep Shoe Company operates a chain of shoe stores that sell 10 different styles of inexpensive men's shoes with identical unit costs and selling prices. A unit is defined as a pair of shoes. Each store has a store manager who is paid a fixed salary. Individual salespeople receive a fixed salary and a sales commission. HighStep is considering opening another store that is expected to have the revenue and cost relationships shown here. View Review Data Formulas Home Page Layout Insert C D E В A Annual Fixed Costs Unit Variable Data (per pair of shoes) 1 $60.00 Rent $ 30,000 2 Selling price $37.00 Salaries 3 Cost of shoes Sales commission 100,000 Advertising Other fixed costs 3.00 40,000 $40.00 5 Variable cost per unit 10,000 Total fixed costs $180,000 6 Consider each question independently. 1. What is the annual breakeven point in (a) units sold and (b) revenues? 2. If 8,000 units are sold, what will be the store's operating income (loss)? 3. If sales commissions are discontinued and fixed salaries are raised by a total of $15,500, what would be the annual breakeven point in (a) units sold and (b) revenues? 4. Refer to the original data. If, in addition to his fixed salary, the store manager is paid a commission of $2.00 per unit sold, what would be the annual breakeven point in (a) units sold and (b) revenues? 5. Refer to the original data. If, in addition to his fixed salary, the store manager is paid a commission of $2.00 per unit in excess of the breakeven point,what would be the store's operating income if 12,000 units were sold? 4
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