Assessment TaskA. The XYZ Shoe Company operates a chain of shoe stores that sell 10 different styles ofmen's shoes with identical unit costs and selling prices. A unit is defined as a pair ofshoes. Each store has a store manager who is paid a fixed salary. Individual salespeoplereceive a fixed salary and a sales commission. XYZ is considering opening another storethat is expected to have the revenue and cost relationship shown here:Unit Variable Data (per pair of shoes)Selling priceCost of shoesAnnual Fixed CostsP3,000.00 Rent2,300.00 Salaries100.00 AdvertisingP2,400.00 Other fixed costP 600,0002,000,000800,000200,000P3,600,000Sales commissionVariable cost per unitTotal fixed costs1. What is the annual breakeven point in (a) units sold and (b) revenues?2. If 5,000 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 ofP810,000, 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 paida commission of P30 per unit in excess of the break-even point, what would be thestore's operating income if 10,000 units were sold.

Contribution means the difference between the selling price and variable cost . Fixed cost when…

Assessment Task A. The XYZ Shoe Company operates a chain of shoe stores that sell 10 different styles of 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. XYZ is considering opening another store that is expected to have the revenue and cost relationship shown here: Unit Variable Data (per pair of shoes) Selling price Cost of shoes Sales commission Variable cost per unit Annual Fixed Costs P3,000.00 Rent 2,300.00 Salaries 100.00 Advertising P2,400.00 Other fixed cost P 600,000 2,000,000 800,000 200,000 3,600,000 Total fixed costs 1. What is the annual breakeven point in (a) units sold and (b) revenues? 2. If 5,000 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 P810,000, what would be the annual breakeven point in (a) units sold and (b) revenues?

Assessment Task A. The XYZ Shoe Company operates a chain of shoe stores that sell 10 different styles of 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. XYZ is considering opening another store that is expected to have the revenue and cost relationship shown here: Unit Variable Data (per pair of shoes) Selling price Cost of shoes Sales commission Variable cost per unit Annual Fixed Costs P3,000.00 Rent 2,300.00 Salaries 100.00 Advertising P2,400.00 Other fixed cost P 600,000 2,000,000 800,000 200,000 3,600,000 Total fixed costs 1. What is the annual breakeven point in (a) units sold and (b) revenues? 2. If 5,000 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 P810,000, what would be the annual breakeven point in (a) units sold and (b) revenues?

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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