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Bonita Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission of 21% of sales.
Bonita 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, 2020, is as follows. BOHI'I'A BEAUTY CORPORATION Income Statement For the Year Ended December 31,. 2020 Sales 98,800,000 lCost of goods sold Variable $31,520,000 Fixed 8,650,000 40,1?0,000 Gross margin $38,630,000 Selling and marketing expenses Commissions $16,548,000 Fixed costs 10,9?0,900 2?,518,900 Operating income $11,111,100 The com pany is considering hiring its own sales sta' to replace the network of agents. It will pay its salespeople a commission ot10% and incur additional xed costs of $8,668.000. a.}Calculate the company's breakeven point in sales dollars for the year 201? if it hires its own sales force to replace the network of agents. (Round intermediate calculations to 2 decimafpfaces. Brea k-eyen point 5 bJCalculate the degree of operating leverage at sales of S?8,800,000 if [1} Bonita Beauty uses sales agents, and {2) Bonita Beauty employs its own sales staff. {Round answers to 2 decimal places, e.g. 1.25.) c.)Calculate the estimated sales volume in sales dollars that would generate an identical net income for the year ending December 31, 2020, regardless of whether Bonita Beauty Corporation employs its own sales staff and pays them an 10% commission or continues to use the independent network of agents
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