The Fashion Shoe Company operates a chain of womens shoe shops that carry many styles...
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Accounting
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 | $ | 40.00 | ||||
| Variable expenses: | ||||||
| Invoice cost | $ | 19.50 | ||||
| Sales commission | 4.50 | |||||
| Total variable expenses | $ | 24.00 | ||||
| Annual | ||||||
| Fixed expenses: | ||||||
| Advertising | $ | 38,000 | ||||
| Rent | 28,000 | |||||
| Salaries | 140,000 | |||||
| Total fixed expenses | $ | 206,000 | ||||
3. If 12,175 pairs of shoes are sold in a year, what would be Shop 48s net operating income (loss)?
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