Question
Glade, Inc. is trying to decide whether to increase the commission-based pay of its salespeople. Currently, each of its five salespeople earns a 15% commission
Glade, Inc. is trying to decide whether to increase the commission-based pay of its salespeople. Currently, each of its five salespeople earns a 15% commission on the units they sell for $100 each, plus a fixed salary of $40,000 per person. Glade hopes that by increasing commissions to 20% and decreasing each salesperson's salary to $25,000, sales will increase because salespeople will be more motivated. Currently, sales are 13,000 units. Glade's other fixed costs, not including the salespeople's salaries, total $580,000. Glade's other variable costs, not including commissions, total $20 per unit. At what sales volume level would Glade earn more profit with the higher-commission plan?
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