Learn Fast specializes in developing online training modules for its client~. Most of its costs are fixed but some have unusual cost behaviour patterns. For exan1ple, because of the intense competition from other companies providing a similar service, Learn Fast pays its sales staff a fixed salary of $80,000 plus sales commissions using the following scheme:

Learn Fast has grown rap idly over the past three years, with similar growth in the number of new clients expected for the next few years. As a resu lt of the growth, Learn Fast's customer support department is struggling to keep up with requests from customers for technical support. The two customer support employees are both paid an annual salary of $75,000 and are paid $60 per hour for
time worked in excess of the 35 s tandard hours per week. In the most recent annual period the two customer support employees worked a combined total of 1,000 overtime hours. Management believes this is the maximum number of overtime hours the two employees can cope with and is considering hiring a th ird full-time staff member for the customer support department at a starting salary of $70,000 per year.

Required:
I. In terms of cost behaviour, what type of cost do sales staff wages represent? Be specific in your description.
2. Estimate total wages for a sales person who generates $210,000 in sales for a year.
3. Discuss any potential negative behavioural consequences among sales staff that the sales commission structure used by Learn Fast might induce.
4. In terms of cost behaviour, what type of cost do customer support staff wages represent? Be specific in your description.
5. Write a cost formu la for a single customer support employee's weekly wages, assuming no change to the salary or overtime rate described above. Assume the annual salary is based on working 50 weeks per year.
6. Calculate the total customer support staff wages for the most recent annual period. Estimate total wages for the next annual period if a new s taff member is hired. What are the advantages and disadvantages of hiring the additional staff member?

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Commission % Sales Level $1-$100,000 $101,000-$150,000 $151,000-$200,000 > $200,000 5% 7% 9% 15%