QUESTION ONE: Oluwayonusimi runs a wine club, she buys a case of wine at N1,000 and sells the case at N1,200. She incurs distribution cost of N50 per case sold. Storage N200,000 Wages N100,000 Consider each of the following questions independently: a. What is the annual break-even point in sales revenue and in unit sales? b. If 380,000 cases were sold in the year, what would Oluwadarasimi profit be? c. Oluwayonusimi thinks that by spending N20,000 per year on advertising, she can make an annual profit of N210,000. What is the sales required? Express your answer in units and in Naira. d. The wages are paid to assistant Olorire who sells the wine. Olorire offers to forgo her salary in exchange for a N25.00 commission for every case sold. If Oluwayonusimi accepts Olorire's offer, what would be the annual break-even point in sales revenue and in unit sales? e. Oluwadarasimi target profit is N600,000. How many cases must be sold to achieve this figure (i) If Olorire receives her N100,000 salary? (ii) If Olorire is paid by commission. f. What level of sales produces a profit figure which will be the same whether Olorire is paid by salary or by commission, what is that level of profit?

krueger Ltd. wishes to earn a before-tax profit equal to 20% of sales revenue. Its monthly fixed costs are $40,000 and contribution margin ratio is equal to 40%. Required: 1. Determine the annual break-even sales. 2. Compute the sales level required to achieve the desired profit level.

krueger Ltd. wishes to earn a before-tax profit equal to 20% of sales revenue. Its monthly fixed costs are $40,000 and contribution margin ratio is equal to 40%. Required: 1. Determine the annual break-even sales. 2. Compute the sales level required to achieve the desired profit level.

PROBLEM 5-26 Basic CVP Analysis; Graphing (L05-1, L05-2, L05-4, L05-5] The Fashion Shoe Company operates a chain of women's shoe shops that carry many styles of shoes that are all sold at the same price. Sales personnel in the shops are paid a substantial com- mission on each pair of shoes sold in addition to a small base salary) in order to encourage them to be aggressive in their sales efforts. The following worksheet contains cost and revenue data for Shop 48 and is typical of the company's many outlets: Per Pair of Shoes Selling price ...... $30.00 Variable expenses: Invoice cost ... Sales commission .. Total variable expenses ..... $13.50 4.50 $18.00 Annual Fixed expenses: Advertising ... Rent Salaries Total fixed expenses .... $ 30,000 20,000 100,000 $150,000 Required: 1. Calculate the annual break-even point in unit sales and in dollar sales for Shop 48. 2. 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. 3. If 12,000 pairs of shoes are sold in a year, what would be Shop 48's net operating income or loss? 4. The company is considering paying the store manager 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 unit sales and in dollar 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? 6. 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 unit sales and in dollar sales for Shop 48? Would you rec- ommend that the change be made? Explain.