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 18% of sales.

image text in transcribedimage text in transcribed

image 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 18% of sales. The income statement for the year ending December 31, 2020, is as follows. BONITA BEAUTY CORPORATION Income Statement For the Year Ended December 31, 2020 Sales $73.900,000 Cost of goods sold Variable $31.777,000 Fixed 8,910,000 40,687,000 Gross margin $33.213.000 Selling and marketing expenses Commissions $13,302,000 Fixed costs 10,937,100 24.239.100 Operating income $8.973,900 The company is considering hiring its own sales staff to replace the network of agents. It will pay its salespeople a commission of 7% and incur additional fixed costs of $8,129,000. (a) Your answer is correct. Under the current policy of using a network of sales agents, calculate the Bonita Beauty Corporation's break-even point in sales dollars for the year 2020. Break-even point $ 50890000 Your answer is correct. Calculate the company's break-even point in seles dollars for the year 2020 if it hires its own sales force to replace the network of agents. Break-even point $ 55952200 eTextbook and Media Assistance Used Attempts: 2 of 3 used (c1) Your answer is correct. Calculate the degree of operating leverage at sales of $73,900,000 if (1) Bonita Beauty uses sales agents, and (2) Bonita Beauty employs its own sales staff. (Round answers to 2 decimal places, eg. 1.25.) Degree of operating leverage (1) Bonita Beauty uses sales agents (2) Bonita Beauty employs its own sales staff Calculate the estimated sales volume in sales dollars that would generate an identical net income for the year ending December 31, 2020, regardless onita Beauty Corporation employs its own sales staff and pays them an 7% commission or continues to use the independent network of agents. 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

Routledge Handbook Of Environmental Accounting

Authors: Jan Bebbington, Carlos Larrinaga, Brendan O'Dwyer, Ian Thomson

1st Edition

0367724901, 9780367724900

More Books

Students also viewed these Accounting questions