Question
Cullumber Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission of 22% of sales.
Cullumber Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission of 22% of sales. The income statement for the year ending December 31, 2022, is as follows.
| CULLUMBER BEAUTY CORPORATION Income Statement For the Year Ended December 31, 2022 | ||||
|---|---|---|---|---|
| Sales | $77,700,000 | |||
| Cost of goods sold | ||||
| Variable | $33,411,000 | |||
| Fixed | 8,500,000 | 41,911,000 | ||
| Gross profit | $35,789,000 | |||
| Selling and marketing expenses | ||||
| Commissions | $17,094,000 | |||
| Fixed costs | 10,470,000 | 27,564,000 | ||
| Operating income | $8,225,000 | |||
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 $11,655,000.
A) Under the current policy of using a network of sales agents, calculate the Cullumber Beauty Corporations break-even point in sales dollars for the year 2022.
| Break-even point |
=
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Accounting For Financial Instruments
Authors: Cormac Butler
1st Edition
0470699809, 978-0470699805
