GNB+13e+Solutions+Ch+06

GNB+13e+Solutions+Ch+06 - P6-21 Fashion Shoe Company1....

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Unformatted text preview: P6-21 Fashion Shoe Company1. Breakeven Units & SalesUnitsSalesFixed expenses$150,000 $150,000 Desired profit$- $- Numerator$150,000 $150,000 Price$30.00 $30.00 Variable cost$18.00 $18.00 Denominator$12.00 0.400 Breakeven point12,500 $375,000 2. Cost-Volume-Profit GraphUnitsTotal CostsTotal Sales- $150,000 $- 2,500 $195,000 $75,000 5,000 $240,000 $150,000 7,500 $285,000 $225,000 10,000 $330,000 $300,000 12,500 $375,000 $375,000 15,000 $420,000 $450,000 17,500 $465,000 $525,000 3. Net Operating Income at 12,000 pairs of shoesRateUnitsTotalSales$30.00 12,000 $360,000 Variable expenses$18.00 12,000 $216,000 Contribution margin$12.00 12,000 $144,000 Fixed expenses$150,000 Net operating profit (loss)$(6,000)CMBE SurplusTotalAlternative Approach:$12.00 (500)$(6,000)[BE Surplus = 12,000 - 12,500]4. Breakeven Units & Sales with $0.75 Store Manager CommissionUnitsSalesFixed expenses$150,000 $150,000 Desired profit$- $- Numerator$150,000 $150,000 Price$30.00 $30.00 Variable cost$18.75 $18.75 ($18 + $0.75)Denominator$11.25 0.375 Breakeven point13,333 $400,000 5. Net Operating Income at 15,000 pairs of shoes with $0.50 Store Manager Commission over BreakevenRateBE UnitsAmountRateAdd'l UnitsAmountTotalSales$30.00 12,500 $375,000 $30.00 2,500 $75,000 $450,000 (Col D + Col G)Variable expenses$18.00 12,500 $225,000 $18.50 2,500 $46,250 $271,250 (Col D + Col G)Contribution margin$12.00 12,500 $150,000 $11.50 2,500 $28,750 $178,750 (Col D + Col G)Fixed expenses$150,000 Net operating profit (loss)$28,750 CMBE SurplusTotalAlternative Approach:$11.50 2,500 $28,750 [BE Surplus = 15,000 = 12,500]6. Eliminate Sales Commission & Increase Salaries by $31,500(a) Breakeven pointUnitsSalesFixed expenses$181,500 $181,500 ($150,000 + $31,500)Desired profit$- $- Numerator$181,500...
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GNB+13e+Solutions+Ch+06 - P6-21 Fashion Shoe Company1....

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