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 7% 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 7% commission on the units they sell for $100 each, plus a fixed salary of $41,800. Glade hopes that by increasing commissions to 12% and decreasing each salespersons salary to $21,500, sales will increase because salespeople will be more motivated. Currently, sales are 21,000 units. Glades other fixed costs, NOT including the salespeoples salaries, total $594,000. Glades other variable costs, NOT including commissions, total $18 per unit.
e.) At what sales level would Glade be indifferent between the lower-commission plan and the higher-commission plan?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started