CVP analysis, shoe stores. The WalkRite Shoe Company operates a chain of shoe stores that sell 10 different styles of inexpensive men's shoes with identical unit costs and selling prices. A unit is defined as a pair of shoes. Each store has a store manager who is paid a fixed salary. Individual salespeople receive a fixed salary and a sales commission. WalkRite is considering opening another store that is expected to have the revenue and cost relationships shown here:
| 1 |
Unit Variable Data (per pair of shoes) |
|
Annual Fixed Costs |
|
|
| 2 |
Selling Price |
$30.00 |
|
Rent |
$60,000 |
|
| 3 |
Cost of shoes |
$19.50 |
|
Salaries |
200,000 |
|
| 4 |
Sales commission |
$1.50 |
|
Advertising |
80,000 |
|
| 5 |
Variable cost per unit |
$21.00 |
|
Other fixed costs |
20,000 |
|
| 6 |
|
|
|
|
|
Total fixed costs |
$360,000 |
|