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Required information [The following information applies to the questions displayed below.] The Fashion Shoe Company...

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Accounting

Required information [The following information applies to the questions displayed below.] The Fashion Shoe Company operates a chain of womens shoe shops that carry many styles of shoes that are all sold at the same price. Sales personnel in the shops are paid a sales commission on each pair of shoes sold plus a small base salary. The following data pertains to Shop 48 and is typical of the companys many outlets: Per Pair of Shoes Selling price $ 20.00 Variable expenses: Invoice cost $ 5.00 Sales commission 5.00 Total variable expenses $ 10.00 Annual Fixed expenses: Advertising $ 36,000 Rent 25,000 Salaries 125,000 Total fixed expenses $ 186,000

5. Refer to the original data. As an alternative to (4) above, the company is considering paying the Shop 48 store manager 45 cents commission on each pair of shoes sold in excess of the break-even point. If this change is made, what will be Shop 48's net operating income (loss) if 21,600 pairs of shoes are sold? (Do not round intermediate calculations.)

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