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Ask an expertRequired information [ The following information applies to the questions displayed below. ] Marathon Company makes and sells a single product. The current

Ask an expertRequired information
[The following information applies to the questions displayed below.]
Marathon Company makes and sells a single product. The current selling price is $20 per unit. Variable expenses are $12
per unit, and fixed expenses total $55,000 per month.
(Unless otherwise stated, consider each requirement separately.)
Management is considering a change in the sales force compensation plan. Currently each of the firm's two salespeople is paid a
salary of $2,500 per month.
g.1. Calculate the monthly operating income (or loss) that would result from changing the compensation plan to a salary of $400 per
month, plus a commission of $0.75 per unit, assuming a sales volume of 7,500 units per month.
Calculate the monthly operating income (or loss) that would result from changing the compensation plan to a salary of $400 per
month, plus a commission of $0.75 per unit, assuming a sales volume of 8,700 units per month.
h.1. Assuming that the sales volume of 8,700 units per month achieved in part g could also be achieved by increasing advertising by
$1,000 per month instead of changing the sales force compensation plan. What would be the operating income or loss?
Which strategy would you recommend?
Complete this question by entering your answers in the tabs below.
Req G1 to H1
g-1. Calculate the monthly operating income (or loss) that would result from changing the compensation plan to a salary of
$400 per month, plus a commission of $0.75 per unit, assuming a sales volume of 7,500 units per month.
Note: Do not round intermediate calculations.
g-2. Calculate the monthly operating income (or loss) that would result from changing the compensation plan to a salary of
$400 per month, plus a commission of $0.75 per unit, assuming a sales volume of 8,700 units per month.
Note: Do not round intermediate calculations. Losses should be indicated by a minus sign.
h-1. Assuming that the sales volume of 8,700 units per month achieved in part g could also be achieved by increasing
advertising by $1,000 per month instead of changing the sales force compensation plan. What would be the operating income
or loss?
Note: Do not round intermediate calculations. Losses should be indicated by a minus sign.
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