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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. So Glade, Inc. currently pays its salespeople $15/unit and total fixed pay is $200,000 for all 5 salespeople. By increasing the commission to 20% the per unit pay increases to $20/unit and total fixed pay decreases to $125,000. At what sales level would Glade be indifferent between the lower-commission plan and the higher-commission plan? 1.500 15.000 300,000 30.000
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