Question
Data concerning Ulwelling Corporation's single product appear below: Per Unit Percent of Sales Selling price $ 170 100% Variable expenses 51 30% Contribution margin $
Data concerning Ulwelling Corporation's single product appear below: |
Per Unit | Percent of Sales | ||
Selling price | $ | 170 | 100% |
Variable expenses | 51 | 30% | |
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Contribution margin | $ | 119 | 70% |
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Fixed expenses are $1,052,000 per month. The company is currently selling 9,800 units per month. |
The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $10 per unit. In exchange, the sales staff would accept an overall decrease in their salaries of $102,000 per month. The marketing manager predicts that introducing this sales incentive would increase monthly sales by 480 units. |
Required: |
What should be the overall effect on the company's monthly net operating income of this change? |
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