Sales price $80.00

Per unit variable expenses

Purchase cost 43.50

Sales commissions 11.50

Total per unit variable costs $55.00

Total annual fixed expenses

Advertising $98,500

Rent 146,500

Salaries 255,000

Total fixed expenses $500,000

While the results of calculations and or graphs are expected, you also need to explain what they mean to Bubba. Assume that Bubba knows absolutely nothing about any of the analysis you provide. What does Bubba need to consider in his decision of whether to stick with commissions or eliminate them?

Transcribed Image Text:

Bubba is considering the elimination of sales commissions completely and increasing salaries by $160,000 annually. Under the current structure, he expects sales of around 20,000 hats. Bubba is considering the elimination of sales commissions completely and increasing salaries by $160,000 annually. Under the current structure, he expects sales of around 20,000 hats.

Answer rating: 100% (QA)

a Break even point 5000008055 20000 Units Break even sales 2000080 1600000 b Contribu... View the full answer