Question
Below is a variable costing income statement for Wilner Glass Company, a maker of bottles for the beverage industry. For the coming year, the company
Below is a variable costing income statement for Wilner Glass Company, a maker of bottles for the beverage industry. For the coming year, the company is considering hiring 3 additional sales representatives at $79,600 each for base salary plus 5 percent of their sales for commissions. The company anticipates that each sales representative will generate $889,800 of incremental sales. Wilner Glass Company Income Statement For the Year Ending December 31, 2014
Sales $20,030,000
Less: Variable cost of goods sold $7,611,400
Variable selling expense 4,206,300
Contribution margin 8,212,300
Less: Fixed production expense 2,594,300
Fixed selling expense 1,785,400
Fixed administrative expense 2,971,600
Net income $861,000
Calculate the impact on profit of the proposed hiring decision.
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