Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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.

image text in transcribedimage text in transcribed
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

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

Modern Advanced Accounting In Canada

Authors: Murray Hilton

6th Edition

0070001537, 978-0070001534

More Books

Students also viewed these Accounting questions

Question

=+c) How many baseballs produced were out of spec?

Answered: 1 week ago