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 11% 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 11% commission on the units they sell for $100 each, plus a fixed salary of $40,200 per person. Glade hopes that by increasing commissions to 16% and decreasing each salespersons salary to $21,300, sales will increase because salespeople will be more motivated. Currently, sales are 20,000 units. Glades other fixed costs, NOT including the salespeoples salaries, total $599,000. Glades other variable costs, NOT including commissions, total $14 per unit.
lede, ric. s rying decide whe her o rirease he contriissic r' b s s p ofits salt specple $599,000, Glade's other variable costs, NOT incuding commissions, total $14 per unit a. What is the current proi? urren e ch crits e sales euple e rns a 1% ntri ssicri cri he units he se for DO e ch plus a xed salary a 20 per persan. Glede hopes het o b. What is the current break-even point in units? (Round your answer to the nearest whole number.) unita c. What wold the break ev pont in units bx if commissionsare incrensed and salrics dec Round your answer to the nearest whole number.) unita d. If sales increase by 7000 units, what wlproft be uder the riew plan? r the New e. At what sales lewel would Glade be Indifferent between the lower-commisslon plan and the higher-commission plan? Indifferenos
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