Reference no: EM133007244

Question: The XYZ Ltd operates a chain of toy stores. The store sells 10 different styles of toys with identical purchase costs & selling prices. The company is trying to determine the desirability of opening another store, which would have the following expense and revenue relations per pair.

Variable Data                 

Selling Price                                 Rs. 30.00
Cost of Toy                                19.50
Salesmen's Commission             1.50
Total Variable Expenses              21.00
Annual Fixed Expenses
Rent                                         60,000.00
Salaries                                    200,000.00
Advertising                               80,000.00
Other fixed expenses                 20,000.00             360,000.00

Required (Consider each question separately)

· What is the annual breakeven point in sales amount & in unit sales?

· If 37,500 Toys are sold, what would the store's net income be?

· If the store manager was paid Rs. 0.45 per pair commission, what would the annual break-even point be in sales amount and in unit sales?

· Refer to the original data, If the store manager were paid Rs. 0.25 per toy as commission on each toy sold in excess of the break-even point, what would be the store's net income if 55,000 toys were sold?

Refer to the original data, If sales commissions were discontinued in favour of Rs. 87,000 increase in fixed salaries, what would the annual break-even point be in amount and and in unit sales?