The Fashion Shoe Company operates a chain of women's shoe shops that carry many styles of shoes that are all sold at the same price. Sales personnel in the shops are paid a sales commission on each pair of shoes sold plus a small base salary. The following data pertain to Shop 48:

Required:
1. What is Shop 48's annual break-even point in unit sales and dollar sales?
2. Prepare a CVP graph showing cost and revenue data for Shop 48 from zero shoes up to 17 ,000 pairs of shoes sold each year. Clearly indicate the break-even point on the graph.
3. If 12,000 pairs of shoes are sold in a year, what would be Shop 48's operating income (loss)?
4. The company is considering paying the Shop 48 store manager an incentive commission of $4 per pair of shoes (in addition to the salesperson's commission). If this change is made, what will be the new break-even point in unit sales?
5. Refer to the original data. As an alternative to (4) above, the company is considering paying the Shop 48 store manager $4.00 commission on each pair of shoes sold in excess of the break-even point. If this change is made, what will be Shop 48's operating income (loss) if 15,000 pairs of shoes are sold?
6. Refer to the original data. The company is considering eliminating sales commissions entirely in its shops and increasing fixed salaries by $60,000 annually. If this change is made, what will be Shop 48's new break-even point in dollar sales?

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Sales price Variable expenses: Invoice cost.. Sales commission..... Total variable expenses Fixed expense per year: Advertising... Rent ... Salaries. Total fixed expenses... Per Pair of Shoes $ 60.00 $ 27.00 9.00 $36.00 $ 60,000 40,000 200,000 $300,000