11:32 ON46 50% CVP Case Morrison Corporation manufactures disposable thermometers that are sold to hospitals through a network of independent sales agents located in the United States. These sales agents sell a variety of products to hospitals in addition to Morrison's disposable thermometer. The sales agents are currently paid a 15% commission on sales, and this commission rate was used when Morrison's management prepared the following budgeted contribution format income statement for the upcoming year. Morrison Corporation Budgeted Income Statement Sales 51,500,000 Commissions 7,725,000 Other Variable Costs 20,500,000 28,225,000 Contribution Margin 23,275,000 Fixed selling costs 10,400,000 Fixed administrive costs 10,200,000 20,600,000 Net Operating Income 2,675,000 Since the completion of the above statement, Morrison's management has learned that the independent sales agents are demanding an increase in the commission rate to 18% of sales for the upcoming year. This would be the third increase in commissions demanded by the independent sales agents in five years. As a result, Morrison's management has decided to investigate the possibility of hiring its own sales staff to replace the independent sales agents. Morrison's controller estimates that the company will have to hire ten salespeople to cover the current market area, and the total annual payroll cost of these employees will be $1,150,000, including benefits. The salespeople will also be paid commissions of 10% of sales. Travel and entertainment expenses are expected to total about $950,000 for the year. The company will also have to hire a sales manager and support staff whose salaries and benefits will come to $300,000 per year. To make up for the promotions that the independent sales agents had been running on behalf of Morrison, management believes that the company's budget for fixed advertising expenses should be increased by $750,000.'0' *3 \"GE.\" BOO/o I Required 1. Assuming sales of $51,500,000, construct a budgeted contribution format income statement for the upcoming year for each of the following alternatives: a. The independent sales agents' commission rate increases to 18% b. The company employs its own sales force. 2' Calculate Morrison Corporation's break-even point in sales dollars for the upcoming year assuming the following a. The independent sales agents' commission rate increases to 13% b. The company employs its own sales force 3. Refer to your answers above. If the company employs its own sales force, what volume of sales would be necessary to generate the net operating income the company would realize if sales of $51,500,000 and the company continues to sell through agents (at an 18% commission rate}? 4. Write a memo to the president of Morrison Corporation In which you make a recommendation as to whetherthe company should continue to use independent sales agents (at an 18% commission rate) or employ its own sales force. Fully explain the reasons for your recommendation in the memo. Deliverables Excel workbook using formulas for all required calculations. The workbook must be easy to follow and professionally formatted. The memo must he in the Excel workbook as a textbox. You must rst post your good faith individual attempt at this casein your group discussion forum. You will then collaborate with your group to adjust and your group leader will post the Group Excel Workbook