1. If Lightcos contribution margin is 40 percent, what increase in sales will it need to break...

Question:

1. If Lightco’s is 40 percent, what increase in sales will it need to break even on the increase in fixed costs to hire the new sales reps?
2. How many new retail accounts must the company acquire to break even on this tactic? What average number of accounts must each new rep acquire?

Lightco, Inc., is a manufacturer of decorative lighting fixtures sold primarily in the eastern United States. Lightco wants to expand to the Midwest and Southern United States and intends to hire ten new sales representatives to secure for its products. Sales reps will acquire new retail accounts and manage those accounts after acquisition. Each sales rep earns a salary of $50,000 plus 2 percent commission. Each retailer generates an average $50,000 in revenue for Lightco. Refer to Appendix 2, Marketing by the Numbers, to answer the following questions:

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes... Distribution
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