Ecorim Corp., a wholesale supply company, uses independent sales agents to market the company's products. These agents receive a commission of 18% of sales. All the following data are in thousands of dollars. The company's budgeted income statement appears below:

Budgeted Income Statement of Ecorim Corp.

Sales

Variable expenses:

Cost of sales

$17,400

Commissions

5,400

Contribution margin

Fixed expenses

$30,000

22,800 $7,200 $6,800

Net income $400

The company is considering the possibility of employing its own salespersons. Eight individuals would be required, at the total fixed salary of $700 for these employees, plus commissions of 10% of sales. In addition, a sales manager would be employed at a fixed salary of $200. The fixed travel expenses are expected to be $900.

Required:

a. Compute the break-even point in sales dollars based upon the company's budgeted income statement, assuming that the company continues to use independent sales agents.

b. Compute the break-even point in sales dollars, assuming that the company employs its own salespersons.

c. Compute the sales dollars that would be required to generate the same net income regardless of whether the company employs its own salespersons or continues to use the independent sales agents.

d. Make a recommendation as to whether the company should continue to use the independent sales agents or employ its own sales force. Give reasons for your answer.