Question
A manufacturer is considering a switch from manufacturers representatives to an internal sales force. The following cost estimates are available. Manufacturers reps are paid 7.6%
A manufacturer is considering a switch from manufacturers representatives to an internal sales force. The following cost estimates are available. Manufacturers reps are paid 7.6% commission and incur $650,000 in fixed costs, while an internal sales force has fixed costs projected at $1,830,000 and would receive 2.6% commission. Assume that sales revenue is double the breakeven volume or the point at which the manufacturer would be indifference between reps and an internal sales force. At this volume, how much would the manufacturer save, assuming the company had switched to an internal sales force? Report your answer in dollars.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started