Problem 5-26 (Static) CVP Applications; Break-Even Analysis; Graphing [LO5-1, LO5-2, LO5-4, LO5-5]

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The Fashion Shoe Company operates a chain of womens 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 pertains to Shop 48 and is typical of the companys many outlets:

	Per Pair of Shoes
Selling price	$ 30.00
Variable expenses:
Invoice cost	$ 13.50
Sales commission	4.50
Total variable expenses	$ 18.00

	Annual
Fixed expenses:
Advertising	$ 30,000
Rent	20,000
Salaries	100,000
Total fixed expenses	$ 150,000

Problem 5-26 (Static) Part 3

3. If 12,000 pairs of shoes are sold in a year, what would be Shop 48s net operating income (loss)?