Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

First picture is the question that I need. The second picture is guidance. Thanks! c. MSM Company management believes that monthly sales should average approximately

First picture is the question that I need. The second picture is guidance. Thanks!
image text in transcribed
image text in transcribed
c. MSM Company management believes that monthly sales should average approximately $425,000 during 2023. Prepare two contribution type income statements using (1) the current cost structure model (the model that includes salaries but no commissions) and (2) a second contribution type income statement using the proposed (fixed salary plus commission) model. 4. The firm is considering reducing monthly fixed salaries (currently $58,000 ) and using a combination salary and commission employee compensation plan. The reduction in fixed salaries would equal $12,000 monthly and be replaced with a 3% of gross sales commission payment. The 3% would be shared by all fixed salary employees. a. Calculate the new breakeven point in monthly sales dollars. ANS: $128,000/37%=$345,946 b. Calculate the new level of monthly sales dollars needed to eam an operating profit of $18,000 monthly. ANS: (128,000+18,000)/37%=$345,595

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Wall Street Mba Your Personal Crash Course In Corporate Finance

Authors: Reuben Advani

3rd Edition

1260135594, 9781260135596

More Books

Students also viewed these Accounting questions

Question

14.4 Analyze in detail three basic causes of accidents.

Answered: 1 week ago