4) Data concerning Hill Corporation's single product appear below:

Per Unit

Percent of Sales

Selling price

$

130

100

%

Variable expenses

26

20

%

Contribution margin

$

104

80

%

Fixed expenses are $456,000 per month. The company is currently selling 5,000 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 $10 per unit. In exchange, the sales staff would accept an overall decrease in their salaries of $53,000 per month. The marketing manager predicts that introducing this sales incentive would increase monthly sales by 90 units. What should be the overall effect on the company's monthly net operating income of this change?

Question

4) Data concerning Hill Corporation's single product appear below:

	Per Unit		Percent of Sales
Selling price	$	130		100	%
Variable expenses		26		20	%
Contribution margin	$	104		80	%

Fixed expenses are $456,000 per month. The company is currently selling 5,000 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 $10 per unit. In exchange, the sales staff would accept an overall decrease in their salaries of $53,000 per month. The marketing manager predicts that introducing this sales incentive would increase monthly sales by 90 units. What should be the overall effect on the company's monthly net operating income of this change?

Accepted Answer

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Question

4) Data concerning Hill Corporation's single product appear below: Per Unit Percent of Sales Selling price $ 130 100 % Variable expenses 26 20 %

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