Reference no: EM132959442
Question - Bill's Footwear retails running shoes for 30 dollars per pair. Bills's footwear spends one thousand dollars a month in rent and pays two full time employees to work one hundred and sixty hours a month at rate of ten dollars per hour. The store shares a manager with a neighbouring company and pays 50% of the manager's annual salary of $60,000 and provides additional compensation in the form of bonus and benefits of $12,000. The company can source their shoes from a low-cost producer and only pays them $10 each due of the manufacturing facilities residing in a low-cost geography.
Required -
a) To break even each month, how running shoes does Bill's footwear need to sell?
b) Bill's footwear needs to earn an operating income of $5,300 per month, how many running shoes do they need to sell?
c) The store's hourly employees agreed to a fifteen percent sales-commission- only pay structure, instead of their hourly pay, how many running shoes would Bill's footwear need to sell to earn on operating income of $5,300?
d) If bill's footwear pay its employees hourly under the original pay structure, but is able to pay the mail 10% of its monthly revenue instead of monthly rent. At what sales levels would Bill's footwear prefer to pay a fixed amount of monthly rent, and what sales level would it prefer to pay 10% of its monthly revenue as rent?
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