Reference no: EM132913543

Question - The maroon Hat Co. sells hats for a variety of age groups. The following information regarding their hat operation is available based upon expected production level of 15,000 hats:

Sales price: $30.00

Variable expenses:

Supplier cost: $13.00

Sales commission: 4.50

Fixed Expenses:

Advertising $2.00

Rent 1.00

Salaries .15

Required -

1. Compute the break-even point in units and sales.

2. What would Purple Hat Co.'s income or loss be if 9,000 hats are sold?

3. The company is considering paying the store manager an incentive commission of .75 per hat (in addition to the sales person's commission). If this change is made, what will be the new breakeven point in units and sales?

Refer to the original data.

Now the company is considering paying the store manager .50 sales commission per hat for each hat sold in excess of the breakeven point (normal commission to the sales person will remain intact). If this change is made, what is the company's net income or loss if 17,000 hats are sold?