Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Blossom Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission of 21% of sales.

image text in transcribedimage text in transcribedimage text in transcribed
Blossom Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission of 21% of sales. The income statement for the year ending December 31, 2025, is as follows. BLOSSOM BEAUTY CORPORATION Income Statement For the Year Ended December 31, 2025 Sales $70,800,000 Cost of goods sold Variable $29,028,000 Fixed 8.840,000 37,868,000 Gross profit $32,932,000 Selling and marketing expenses Commissions $14,868,000 Fixed costs 10,570,400 25,438.400 Operating income $7,493,600 The company is considering hiring its own sales staff to replace the network of agents. It will pay its salespeople a commission of 9% and incur additional fixed costs of $8,496,000.Your answer is correct. Under the current policy of using a network of sales agents, calculate the Blossom Beauty Corporation's break-even point in sales dollars for the year 2025. Break-even point $ 51080000 eTextbook and Media Attempts: 1 of 2 used (b) Your answer is correct. Calculate the company's break-even point in sales dollars for the year 2025 if it hires its own sales force to replace the network of agents. Break-even point 55812800 eTextbook and MediaYour answer is correct. Calculate the degree of operating leverage at sales of $70,800,000 if (1) Blossom Beauty uses sales agents, and (2) Blossom Beauty employs its own sales staff. (Round answers to 2 decimal places, e.g. 1.25.) Degree of operating leverage (1) Blossom Beauty uses sales agents 3.59 (2) Blossom Beauty employs its own sales staff 4.72 eTextbook and Media Attempts: 2 of 2 used (d) Calculate the estimated sales volume in sales dollars that would generate an identical net income for the year ending December 31, 2025, regardless of whether Blossom Beauty Corporation employs its own sales staff and pays them an 9% commission or continues to use the independent network of agents. (Hint: Set up an equation, with the net income formula employing independent agents as one side of the equation and the net income formula employing the company's own sales staff as the other side of the equation. Before solving, eliminate those aspects that are the same on each side of the equation as they do not vary under the two alternatives.) Estimated sales volume $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Tools For Business Decision Making

Authors: Paul D. Kimmel,  Jerry J. Weygandt,  Jill E. Mitchell

8th Edition

1119791057, 978-1119791058

More Books

Students also viewed these Accounting questions

Question

Importance of linear regression in research analysis.

Answered: 1 week ago

Question

7. How can the models we use have a detrimental effect on others?

Answered: 1 week ago