Beta company sells blouses in Washington, USA. Blouses are imported from Pakistan and are sold to customers in Washington at a profit. Salespersons are paid basic salary plus a decent commission of $14 on each sale made by them. Selling price and expense data is given below: Selling Price $80.00Variable Costs Invoice $36 Commission $14Total Variable $50Annualized Fixed Rent $160,000 marketing $300,000 Salaries $140,000 Total Fixed $600,000 Compute the break-even point in units and in dollars using the information given above.Prepare a CVP graph (break-even chart) and show the break-even point on the graph.What would be net operating income or loss if company sells 18,500 blouses in a year?If the manage is paid a commission of $6 blouse (in addition to the salesperson’s commission), what will be the effect on company’s break-even point?As an alternative to (3) above, company is thinking to pay $6 commission to manager on each blouse sold in excess of break-even point. What will be the effect of these changes on the net operating income or loss of the Beta company if 23,500 blouses are sold in a year?Refer to the original data. What will be the break-even point of the company if commission is entirely eliminated and salaries are increased by $214,000?

Answer 1 break-even point in units and in dollars using the information given above Selling…

Answered: blouses in Washington, USA. Blouses are…

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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Beta company sells blouses in Washington, USA. Blouses are imported from Pakistan and are sold to customers in Washington at a profit. Salespersons are paid basic salary plus a decent commission of $14 on each sale made by them. Selling price and expense data is given below:

Selling Price $80.00

Variable Costs

Invoice $36

Commission $14

Total Variable $50

Annualized Fixed

Rent $160,000

marketing $300,000

Salaries $140,000

Total Fixed $600,000

Compute the break-even point in units and in dollars using the information given above.
Prepare a CVP graph (break-even chart) and show the break-even point on the graph.
What would be net operating income or loss if company sells 18,500 blouses in a year?
If the manage is paid a commission of $6 blouse (in addition to the salesperson’s commission), what will be the effect on company’s break-even point?
As an alternative to (3) above, company is thinking to pay $6 commission to manager on each blouse sold in excess of break-even point. What will be the effect of these changes on the net operating income or loss of the Beta company if 23,500 blouses are sold in a year?
Refer to the original data. What will be the break-even point of the company if commission is entirely eliminated and salaries are increased by $214,000?

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