Question
Determine the dollar sales at which net income would be equal regardless of paying 20% commission or paying an internal sales team. 15% Commission 20%
Determine the dollar sales at which net income would be equal regardless of paying 20% commission or paying an internal sales team.
15% Commission 20% Commission Sales: Manufacturing Expenses: Commissions to Agents Total Variable: Contribution Margin: 16,000,000 100% 16,000,000 100% Internal Sales Team: 16,000,000 100% 7,200,000 7,200,000 7,200,000 2,400,000 3,200,000 1,200,000 9,600,000 10,400,000 8,400,000 6,400,000 40% 5,600,000 35% 7,600,000 48% Fixed Expenses: Manufacturing O/H 2,340,000.00 2,340,000.00 2,340,000.00 Fixed Marketing: Fixed Admin: Interest: 120,000.00 1,800,000.00 540,000.00 1,800,000.00 120,000.00 2,520,000.00 1,725,000.00 540,000.00 540,000.00 Total Fixed Expeneses: 4,800,000.00 4,800,000.00 7,125,000.00 Income before Taxes: 1,600,000.00 800,000.00 475,000.00 Income Taxes: Net Income: 480,000.00 1,120,000.00 240,000.00 142,500.00 560,000.00 332,500.00 Breakeven Point 12,000,000.00 13,714,285.71 15,000,000.00
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