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Blizzard-Wear Glove Company operates a chain of retail kiosks (small retail booths) located at the base of every major ski hill. The kiosks sell ten different styles of ski and mountain biking gloves with identical unit costs and selling prices. A unit is defined as a pair of gloves. Each kiosk has a manager who is paid a fixed salary. Individual salespeople are paid a combination of fixed salary and a sales commission. Blizzard-Wear is trying to determine the desirability of opening another kiosk at Silver Star Mountain in the Okanagan Valley. The new kiosk is expected to have the following revenue and cost relationships

		Behaviour
Selling price, per pair of gloves	$ 36.00	V
Cost per pair of gloves	23.40	V
Sales commissions per pair of gloves	1.80	V
Kiosk rent	37,500	F
Salaries	145,000	F
Advertising	23,000	F
Other fixed costs	10,500	F

Required (10 marks): (Consider each question independently and use two decimal places.)

1. What is the annual breakeven point in (a) units sold and (b) revenues? (2 marks)
2. If the corporate tax rate were 20%, how much additional revenue would have to be earned in order to earn $10,000 after taxes? (2 marks)
3. If 15,000 units are sold, what will be the stores operating income (loss)? (2 marks)
4. If sales commissions were discontinued for individual salespeople in favour of a $10,800 increase in fixed salaries, what would be the annual breakeven point in (a) units sold and (b) revenues? (2marks)
5. Refer to the original data. If the store manager were paid $0.36 per unit commission on each unit sold in excess of the breakeven point (as calculated in Part a), what would be the stores operating income if 35,000 units were sold? (This $0.36 is in addition to both the commission paid to the sales staff and the store managers fixed salary based on the original data, not the changes calculated in Part d.) (2 marks)

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