Question - The Fashion Shoe Company operates a chain of women's shoe shops that 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 base salary) in order to encourage them to be aggressive in their sales efforts.
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 expense $18.00
Annual Fixed expenses:
Advertising $30,000
Rent 20,000
Salaries 100,000
Total fixed expenses $150,000
Required: Calculate the annual break-even point in unit sales and in dollar sales for Shop 48.