C-V-P Analysis—Changes in Variables Modern Fun Corporation sells electronic games. Its five salespersons are currently being paid fixed salaries of $30,000 each; however, the sales manager has suggested that it might be more profitable to pay the salespersons on a straight commission basis. He has suggested a commission of 15% of sales. Current data for Modern Fun Corporation are as follows:

1. Assuming that Modern Fun Corporation has a target income of $50,000 for next year, which alternative is more attractive?
2. The sales manager believes that by switching to a commission basis, sales will increase 20%. What is the estimated profit under this assumption?

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Sales volume Sales price Variable costs Fixed costs 20,000 units $40 per unit $29 per unit $200,000