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Shirts Unlimited_CVP Analysis




Question;Analysis;Graph Problem;Shirts Unlimited operates a chain of shirt;stores that carry many styles of shirts that are all sold at the same;price. To encourage sales personnel to;be aggressive in their sales efforts, the company pays a substantial sales;commission on each shirt sold. Sales;personnel also receive a small basic salary.;The following worksheet contains;cost and revenue data for Store 36.;These data are typical of the company?s many outlets;The company has asked you, as a member of;its planning group, to assist in some basic analysis of its stores and company;policies.;1.;Calculate the annual break-even;point in dollar sales and in unit sales for Store 36.;2.;Prepare a CVP graph showing;cost and revenue data for Store 36 from zero shirts up to 30,000 shirts sold;each year. Clearly;indicate the break-even point on the graph.;3.;If 19,000 shirts are sold in a;year, what would be Store 36?s net operating income or loss?;4.;The company is considering;paying the store manager of Store 36 an incentive commission of $3 per shirt;(in addition to the salespersons? commissions) If this change is made, what;will be the new break-even point in dollar sales and in unit sales?;5.;Refer to the original data. As;an alternative to (4) above the company is considering paying the store manager;a $3 commission on each shirt sold in excess of the break-even point. If this;change is made, what will be the store?s net operating income or loss if 23,500;shirts are sold in a year?;6.;Refer to the original;data. The company is considering;eliminating sales commissions entirely in its stores and increasing fixed;salaries by $107,000 annually.;a.;If this change is made what;will be the new break-even point in dollar sales and in unit sales in Store 36?;b.;Would you recommend that the;change be made? Explain why


Paper#37555 | Written in 18-Jul-2015

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