Company is selling shoes and has the following data related to its Variable and Fixed costs under plan A, under plan B the manager wants to cancel Sales commission but to increase fixed salaries to shop sellers.

Selling price	$ 30.00	Variable	Annual Fixed Costs	Plan A
Cost of shoes	$ 19.50	VC	Rent	$ 60,000.00
Sales Commission	$ 1.50	VC	Salaries	$ 200,000.00
Variable cost	$ 21.00	variable	Advertising	$ 80,000.00
			Other fixed Costs	$ 20,000.00
			Total fixed costs	$ 360,000.00

Plan B	FC:	increase in fixed portion
360000+81000		of salaries by 81000$
Cancel commission		Cancel commission
$ 21.50	VC:	1.5

Required: 

1. Calculate BE for plan A

2. Calculate BE for plan B

3. Calculate under which condition is plan A better for the owner of the shoe shop than plan B.

4. What is the quantity in which does not matter if the owner applies plan A or B.

Answer rating: 100% (QA)

Answer Step by Step Explanation Reason tet BEP of Plan A is 40000 units This 1 Brea... View the full answer