Basic CVP Analysis Paper SHSMITH

Basic CVP Analysis Paper SHSMITH - Basic CVP Analysis...

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Basic CVP Analysis BUS630: Managerial Accounting (MAG1105A) Ashford University Submitted to: Brian Shaw Submitted by: Shameka Smith Due: February 7, 2011 The Fashion Shoe Company operates a chain of women’s shoe shops around the country. The shops carry many styles of shoes that are all sold at the same price. Sales personnel in the shops are paid a substantial commission on each pair of shoes sold (in addition to a small basic salary) in order to encourage them to be aggressive in their sales efforts.
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The following worksheet contains cost and revenue data for Shop 48 and is typical of the company’s 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 Calculate the annual break-even point in dollar sales and in unit sales for Shop 48. 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. If 12,000 pairs of shoes are sold in a year, what would be Shop 48's net operating income
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Basic CVP Analysis Paper SHSMITH - Basic CVP Analysis...

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