A furniture manufacturer is currently using manufacturer’s representatives to sell its line of living room furniture.

These representatives receive an 8 percent commission. The company is considering hiring its own salespeople and has estimated that the fixed cost of managing and paying their salaries would be $1 million annually. The salespeople would also receive a 4 percent commission on sales. The company has sales of

$25 million, and sales are expected to grow by 15 percent next year. Would you recommend that the company switch to its own salesforce? Why or why not?

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