• Calculate the annual break-even point in dollar sales and in unit sales for Shop 48.

• Prepare a CVP graph showing cost and revenue data for Shop 48 from zero shoes up to 17,000 pairs of shoes sold each year. Clearly indicate the break-even point on the graph.
• If 12,000 pairs of shoes are sold in a year, what would be Shop 48's net operating income or loss?
The company is considering paying the store manager of Shop 48 an incentive commission of Shop 48 an incentive commission of 75 cents per pair of shoes (in addition to the salesperson's commission). If this change is made, what will be the new break-even point in dollar sales and in unit sales?
• Refer to the original data. As an alternative to (4) above, the company is considering paying the store manager 50 cents commission on each pair of shoes sold in excess of the break-even point. If this change is made, what will be the shop's net operating income or loss if 15,000 pairs of shoes are sold?
• Refer to the original data. The company is considering eliminating sales commissions entirely in its shops and increasing fixed salaries by $31,500 annually. If this change is made, what will be the new break-even point in dollar sales and in unit sales for Shop 48? Would you recommend that the change be made? Explain.
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To calculate the annual break-even point in dollar sales and unit sales, we need to use the contribution margin ratio. The contribution margin ratio is calculated by subtracting the variable cost per unit from the selling price per unit, and then dividing by the selling price per unit.

First, we need some information:

- Selling price per pair of shoes: This information is not provided in the question.
- Variable cost per pair of shoes: This information is not provided in the question.
- Fixed costs: This information is not provided in the question.

Since the necessary information is missing from the question, I'm unable to provide the specific calculations required to answer the questions accurately. However, I will explain how to approach these calculations with the given information.

1. To calculate the break-even point in dollar sales, divide the fixed costs by the contribution margin ratio. This will give you the dollar amount of sales required to cover all costs and break even.

Formula: Break-even point in dollar sales = Fixed costs / Contribution margin ratio

2. To calculate the break-even point in unit sales, divide the fixed costs by the contribution margin per unit. This will give you the number of units that need to be sold to cover all costs and break even.

Formula: Break-even point in unit sales = Fixed costs / Contribution margin per unit

3. To prepare a CVP graph, plot the total cost line, total revenue line, and the break-even point on a graph. The X-axis should represent the number of pairs of shoes sold, and the Y-axis should represent the dollar amount for both cost and revenue. Then, plot the data points to create the lines and clearly indicate the break-even point.

4. To calculate the net operating income or loss when 12,000 pairs of shoes are sold, subtract the total cost from the total revenue. The net operating income will be positive if it is above break-even, indicating a profit, and negative if it is below break-even, indicating a loss.

5. To calculate the new break-even point in dollar sales and unit sales with a store manager incentive commission of 75 cents per pair of shoes, you will need to determine the change in the contribution margin per unit. Subtract the commission per unit from the original contribution margin per unit, and then use the formulas from step 1 and 2 to calculate the new break-even points.

6. To calculate the net operating income or loss when 15,000 pairs of shoes are sold with a 50 cents commission on each pair of shoes sold in excess of the break-even point, you will need to determine the excess units sold. Subtract the break-even point in unit sales from 15,000, and then calculate the total commission expense. Subtract this expense from the total contribution margin to calculate the net operating income or loss.

7. To calculate the new break-even point in dollar sales and unit sales when sales commissions are eliminated and fixed salaries are increased by $31,500 annually, subtract the total commission expense from the fixed costs, and then use the formulas from step 1 and 2 to calculate the new break-even points.

Based on the information provided, it is not possible to recommend whether the change should be made without knowing all the costs and revenue figures. A thorough analysis of the potential impact of the change on the break-even point and net operating income would be required before making a recommendation.