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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. BONITA BEAUTY CORPORATION Income Statement For the Year Ended December 31, 2020 Sales $74,800,000 Cost of goods sold Variable $29,920,000 8,590,000 38,510,000 Gross margin $36,290,000 Selling and marketing expenses Commissions $15,708,000 Fixed costs 10,890,500 26,598,500 Operating income $9,691,500 Fixed The company is considering hiring its own sales staff to replace the network of agents. It will pay its salespeople a commission of 10% and incur additional fixed costs of $8,228,000. (a) 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 $ 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 $ 49950000 e Textbook and Media Attempts: unlimited (b) Your answer is incorrect. Calculate the company's break-even point in sales dollars for the year 2020 if it hires its own sales force to replace the network of agents. Break-even point $ e Textbook and Media Save for Later Attempts: unlimited Submit Answer (c1) Calculate the degree of operating leverage at sales of $74.800,000 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.) Degree of operating leverage (1) Bonita Beauty uses sales agents (2) Bonita Beauty employs its own sales staff e Textbook and Media Save for Later Attempts: unlimited Submit Answer (d) The parts of this question must be completed in order. This part will be available when you complete the part above
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