Crescent Corporation manufactures multi-function photocopiers that are sold through a network of independent sales agents. These sales agents sell a variety of products to businesses in addition to crescent's photocopiers.The sales agents are paid a 19% commission on sales, and this commission rate was used when Crescent's management prepared the following budgeted income statement for the coming year:

Sales

Sales $15,000,000 Cost of goods sold Variable $8,400,000 Fixed 1,400,000 9,800,000 Gross margin 5,200,000 Selling and administrative expenses: Commissions 2,850,000 Fixed advertising expense 400,000 Fixed administrative expense 1,600,000 4,850,000 Operating income $350,000