3. Moallankamp Corporation produces and sells a single product. Data concerning that product are:

(See image below)

Fixed expenses are $1,131,000 per month. The company is currently selling 7,000 units per month.

Required:

The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $20 per unit. In exchange, the sales staff would accept an overall decrease in their salaries of $117,000 per month. The marketing manager predicts that introducing this sales incentive would increase monthly sales by 400 units. What should be the overall effect on the company's monthly net operating income of this change? Show your work!

5. RRR, Inc. has the following budgeted income statement for the year:

Sales 400K

Cost of Goods Sold:

Variable costs240K

Fixed costs50k

Gross margin 110k

Administrative expenses:

Variable 20k

Fixed 60k

Net income 30k

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Required: Using cost-volume-profit analysis and relevant formulas, calculate the sales level (in dollars) the company needed to achieve a target profit of $100,000 for the year.

Per Unit $230 46 $184 Percent of Sales Variable expenses Contribution margin.. 100% 20% 80%