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ACCOUNTING 3041-The WalkRite Shoe Company operates a chain

01 / 10 / 2021 Projects

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ACCOUNTING 3041-The WalkRite Shoe Company operates a chain

The WalkRite Shoe Company operates a chain of shoe stores that sell10 different styles of inexpensive men’s shoes with identical unit costs and selling prices. A unit is defined asa pair of shoes. Each store has a store manager who is paid a fixed salary. Individual salespeople receive afixed salary and a sales commission. WalkRite is considering opening another store that is expected to havethe revenue and cost relationships shown here:123456A B C D ESelling price $30.00 Rent $ 60,000Cost of shoes $19.50 Salaries 200,000Sales commission 1.50 Advertising 80,000Variable cost per unit $21.00 Other fixed costs 20,000Total fixed costs $360,000Unit Variable Data (per pair of shoes) Annual Fixed CostsConsider each question independently: Required1. What is the annual breakeven point in (a) units sold and (b) revenues?2. If 35,000 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 $81,000, what would bethe 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$0.30 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 commissionof $0.30 per unit in excess of the breakeven point, what would be the store’s operating income if50,000 units were sold?



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