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 13% 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 13% commission on the units they sell for $100 each, plus a fixed salary of $41,300 per person. Glade hopes that by increasing commissions to 18% and decreasing each salespersons salary to $20,300, 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 $584,000. Glades other variable costs, NOT including commissions, total $16 per unit.
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Any help is much appreciated!
a. What is the current profit? Current Pro b. What is the current break-even point in units? (Round your answer to the nearest whole number.) Break-even Point units What would the break-even point in units be if commissions are increased and salaries decreased? (Round your answer to the nearest whole number.) Break-even Point unis d. If sales incresce by 12,000 units, what will profit be under the new plan? Prof: Under the New Plan e. At what sales level would Glede be incifferent between the lower-commission plan and the higher-commission plan? Point of InderenceStep by Step Solution
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