$559,600
|
|
$458,280
|
|
 |
$640,000
|
$265,255
|
| Required: | |
| 1. |
Compute for the company’s break-even point in unit sales using the equation method.
|
| Break-even point in unit sales | 2,750  | baskets |
| 2. |
Compute for the company’s break-even point in sales dollars using the equation method and the CM ratio. (Do not round intermediate calculations. Round your CM ratio to 2 decimal places.Omit the "$" sign in your response.)
|
| CM ratio | .25 |
| Break-even point in dollar sales | $ 22,000 |
| 3. |
Compute for the company’s break-even point in unit sales using the formula method.
|
| Break-even point in unit sales | 2,750 | baskets |
| 4. |
Compute for the company’s break-even point in sales dollars using formula method and the CM ratio. (Do not round intermediate calculations. Round your CM ratio to 2 decimal places. Omit the "$" sign in your response.)
|
| CM ratio | .25 |
| Break-even point in dollar sales | $ 22,000 |
Shirts
Unlimited operates a chain of shirt stores that carry many styles of
shirts that are all sold at the same price. To encourage sales personnel
to be aggressive in their sales efforts, the company pays a substantial
sales commission on each shirt sold. Sales personnel also receive a
small basic salary.
|
The following worksheet contains cost and revenue data for Store 36. These data are typical of the company's many outlets:
|
| Per Shirt | ||
| Selling price | $ | 40.00 |
| Variable expenses: | ||
| Invoice cost | $ | 18.00 |
| Sales commission | 7.00 | |
| Total variable expenses | $ | 25.00 |
| Annual | ||
| Fixed expenses: | ||
| Rent | $ | 80,000 |
| Advertising | 150,000 | |
| Salaries | 70,000 | |
| Total fixed expenses | $ | 300,000 |
The company has asked you, as a member of its planning group, to assist in some basic analysis of
its stores and company policies. |
| Required: | |
| 1. |
Calculate the annual break-even point in dollar sales and in unit sales for Store 36. (Omit the "$" sign in your response.)
|
| Break-even point in unit sales | 20,000 | shirts |
| Break-even point in dollar sales | $ 800,000 | |
| 3. |
If 19,000 shirts are sold in a year, what would be Store 36's net operating income or loss? (Input the amount as a positive value. Omit the "$" sign in your response.)
|
| Net operating loss | $ 15,000 |
| 4. |
The
company is considering paying the store manager of Store 36 an
incentive commission of $3 per shirt (in addition to the salespersons'
commissions). If this change is made, what will be the new break-even
point in dollar sales and in unit sales? (Omit the "$" sign in your response.)
|
| New break-even point in unit sales | 25,000 | shirts |
| New break-even point in dollar sales | $ 1,000,000 | |
| 5. |
Refer
to the original data. As an alternative to (4) above, the company is
considering paying the store manager a $3 commission on each shirt sold
in excess of the break-even point. If this change is made, what will be
the store’s net operating income or loss if 23,500 shirts are sold in a
year? (Input the amount as a positive value. Omit the "$" sign in your response.)
|
| Net operating income | $ 42,000 |
| 6. |
Refer
to the original data. The company is considering eliminating sales
commissions entirely in its stores and increasing fixed salaries by
$107,000 annually. If this change is made, what will be the new
break-even point in dollar sales and in unit sales in Store 36? (Omit the "$" sign in your response.)
|
| New break-even point in unit sales | 18,500 | shirts |
| New break-even point in dollar sales | $ 740,000 |
Maxson
Products distributes a single product, a woven basket whose selling
price is $8 and whose variable cost is $6 per unit. The company’s
monthly fixed expense is $5,500.
|
| Required: | |
| 1. |
Compute for the company’s break-even point in unit sales using the equation method.
|
| Break-even point in unit sales | 2,750 | baskets |
| 2. |
Compute for the company’s break-even point in sales dollars using the equation method and the CM ratio. (Do not round intermediate calculations. Round your CM ratio to 2 decimal places.Omit the "$" sign in your response.)
|
| CM ratio | .25 |
| Break-even point in dollar sales | $ 22,000 |
| 3. |
Compute for the company’s break-even point in unit sales using the formula method.
|
| Break-even point in unit sales | 2,750 | baskets |
| 4. |
Compute for the company’s break-even point in sales dollars using formula method and the CM ratio. (Do not round intermediate calculations. Round your CM ratio to 2 decimal places. Omit the "$" sign in your response.)
|
| CM ratio | .25 |
| Break-even point in dollar sales | $ 22,000 |
