3. BioPharm Corporation manufactures pharmaceutical products that are sold through a network of external sales agents. The agents are paid a commission of 20% of revenues. BioPharm is considering replacing the sales agents with its own salespeople, who would be paid a commission of 13% of revenues and total salaries of $2,240,000. The income statement for the year ending December 31, 2013, under the two scenarios is shown here. 1 2 3 Home Insert A Page Layout Formulas B C Data Review D View E BioPharm Corporation Income Statement For the Year Ended December 31, 2013 Using Sales Agents 4 5 Revenues $32,000,000 Using Own Sales Force $32,000,000 6 Cost of goods sold 7 Variable $12,160,000 $12,160,000 8 Fixed 3,750.000 15,910,000 3,750,000 15,910,000 9 Gross margin 16,090,000 16,090,000 10 Marketing costs 11 Commissions $ 6,400,000 $ 4,160,000 12 Fixed costs 3,660,000 10.060,000 $ 6,030,000 5,900,000 10.060,000 $ 6,030,000 Required: 13 Operating income Copyright 2015 Pearson Education, Inc. 1. Calculate BioPharm's 2013 contribution margin percentage, breakeven revenues, and degree of operating leverage under the two scenarios. 2. In 2014, BioPharm uses its own salespeople, who demand a 16% commission. If all other cost- behavior patterns are unchanged, how much revenue must the salespeople generate in order to earn the same operating income as in 2013