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Gaveg 1 Klyne Corporation manufactures pharmaceutical products that are sold through a network of sales agents. The agents are paid a commission of 24% of
Gaveg 1 Klyne Corporation manufactures pharmaceutical products that are sold through a network of sales agents. The agents are paid a commission of 24% of sales. The income statement for the year ending December 31, 2020, is as follows: 02:55:11 $ 29, 82e, eee KLYNE CORPORATION Income Statement For the Year Ending December 31, 2020 Sales cost of goods sold variable $14,790, eee Fixed 2,876, eee Gross margin selling and marketing expenses Commissions 6,960,000 Fixed costs 3,270, eee Operating income 17, 666,000 11 334, eee eBook 10, 230,000 $ 1,184, eee Klyne is considering hiring its own sales staff to replace the network of agents. Klyne will pay its salespeople a commission of 12% and Incur fixed costs of $2.086.000 Required: 1. Calculate Klyne Corporation's break-even point in sales dollars for the year 2020 (Round your answer to 2 decimal places.) Break-even point 2. Calculate Klyne Corporation's break-even point in sales dollars for the year 2020 if the company had hired its own sales force to replace the network of agents. (Round your answer to 2 decimal places.) Break-even point 3. Calculate the degree of operating leverage at sales of $29.000.000. considering (a) Klyne uses sales agents and (b) Klyne employs its own staff. Describe the advantages and disadvantages of each alternative. (Round your answers to 2 decimal places.) Degree of Operating Leverage Using sales agent Employing own sales staff 4. If Klyne increases the commission paid to its sales staff to 10%, keeping all other costs the same, how much revenue (In dollars) would Klyne have to generate to earn the same operating income it did in 2020? (Round your answer to 2 decimal places.) Revenue in dollars)
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