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The Fashion Shoe Company operates a chain of women's shoe shops around the country. The shops carry many styles of shoes that are all sold at the same price. Sales personnel in the shops are paid a substantial commission on the following pair of shoes sold (in addition to a small basic 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.
(f) 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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abhaydwive123

Net operating income/(loss):        

                                          $    $

Sales revenue     (31200*25)     780000

Less:            

Variable expenses     (31200*15)   468000  

Commission on shoes sold in excess of BEP       (31200-28300)*0.50 1450  

Total fixed expenses         283000 752450

Net operating income           27550

Net Operating Income (NOI for short) is a formula used in the real estate industry to quickly calculate the profitability of a particular investment. NOI determines the return and profitability of an investment property after deducting necessary operating costs.

Net operating income profit represents the company's profit after deducting all expenses except debt costs, taxes, and certain one-off items. Net profit, on the other hand, shows the profit remaining after deducting all expenses incurred during the period from sales.

Learn more about Net operating income at

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