Below is a variable costing income statement for Trio Office Supplies, a company well known for its quality high-volume automatic staplers. For the coming year, the company is considering hiring three additional sales representatives at $150,000 each in base salary. The company anticipates that each sales representative will generate $400,000 of incremental sales. 

Required 

a. Calculate the impact on profit of the proposed hiring decision. Should the company hire the three additional sales representatives? 

b. Consider the analysis of the decision performed by the company’s chief accountant and compare it to your analysis in part a. What is the fundamental flaw in the chief accountant’s work?

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Trio Office Supplies Income Statement For the Year Ending December 31, 2020 Sales $30,000,000 Less: Variable cost of goods sold $15,000,000 Variable selling expense 3,000,000 18,000,000 Contribution margin 12,000,000 Less: Fixed production expense 2,000,000 Fixed selling expense Fixed administrative expense 1,500,000 3,000,000 6,500,000 Net income $ 5,500,000