(Break-even point operating leverage) Footwear Inc. manufactures a complete line
of mens and womens dress shoes for independent merchant. The average selling price of its
finished product is $90 per pair. The variable cost for this same pair of shoes is $60. Footwear
Inc. incurs fixed costs of $160,000 per year.
a. What is the break-even point in pairs of shoes for the company?
b. What is the dollar sales volume the firm must achieve to reach the break-even point?
c. What would be the firms profit or loss at the following units of production sold:
4,000 pairs of shoes? 11,000 pairs of shoes? 18,000 pairs of shoes?