Solution-What will be the store before tax profit or loss

What will be the store before tax profit or loss

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Reference no: EM132739052

Shoes, Unlimited operates a chain of shoe stores around the country. The stores carry many styles of shoes 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 pair of shoes sold. Sales personnel also receive a small basic salary.

The following cost and revenue data relate to Store 21 and are typical of the company's many sales outlets:

Selling price P 800

Variable expenses:

Invoice costs P360

Sales commission 140

500

Fixed expenses per year:

Rent P1,600,000

Advertising 3,000,000

Salaries 1,400,000

Total P6,000,000

Problem 1: The company is considering paying the store manager a P60 commission on each pair of shoes sold in excess of break-even point. If this change were made, what will be the store's before tax profit or loss assuming 23,500 pairs of shoes are sold in a year?

A. P(360,000) C. P840,000

B. P2,930,000 D. P1,330,000

Reference no: EM132739052

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What will be the store before tax profit or loss

Reference no: EM132739052

Reference no: EM132739052

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