Answered step by step
Verified Expert Solution
Question
1 Approved Answer
I would appreciate if this was answered in the next hour, thank you so much! :) Also, this question added to it. If Lionel continues
I would appreciate if this was answered in the next hour, thank you so much! :) Also, this question added to it.
If Lionel continues to sell through its network of sales agents and pays the higher commission rate, determine the estimated volume in sales dollars that would be required to generate the operating profit as projected in the budgeted income statement. (Do not round intermediate calculations. Enter your answers in thousands of dollars.) Find the Estimated Volume (In sales dollar)
Assignment #6 (Chapter 9) Saved For the Year Ending June 30, 2019 ($000 omitted) 4 Sales Cost of goods sold $29,400 Variable $13,230 3,528 16,758 $12,642 Fixed Gross profit Selling and administrative costs 01:01:24 Commissions Fixed advertising cost Fixed administrative cost S 5,292 882 2,352 8,526 s 4,116 735 $3,381 1,014 $2,367 Operating income Fixed interest cost Income before income taxes Income taxes (30%) Net income Since the completion of the income statement, Lionel has learned that its sales agents are requiring a 5% increase in their commission rate (to 23%) for the upcoming year. As a result, Lionel's president has decided to investigate the possibility of hiring its own sales staff in place of the network of sales agents and has asked Alan Chen, Lionel's controller, to gather information on the costs associated with this change Alan estimates that Lionel must hire eight salespeople to cover the current market area, at an average annual payroll cost for each employee of $80,000, including fringe benefits expense. Travel and entertainment expenses is expected to total $690,000 for the year, and the annual cost of hiring a sales manager and sales secretary will be $195,000. In addition to their salaries, the eight salespeople will each earn commissions at the rate of 10% of sales. The president believes that Lionel also should increase its advertising budget by $590,000 if the eight salespeople are hired. Required 1. Determine Lionel's breakeven point (operating profit O) in sales dollars for the fiscal year ending June 30, 2019, if the company hires its own sales force and increases its advertising costs. Prove this by constructing a contribution income statement 2. If Lionel continues to sell through its network of sales agents and pays the higher commission rate, determine the estimated volume in sales dollars that would be required to generate the operating profit as projected in the budgeted income statement Complete this question by entering your answers in the tabs below Required Required Determine Lionel's breakeven point (operating profit 0) in sales dollars for the fiscal year ending June 30, 2019, if the company hires its own sales force and increases its advertising costs. Prove this by constructing a contribution income statement. (Do not round intermediate calculations. Enter your answers in thousands of dollars.) eakeven ars ontribution Income Statemen Sales Variable costs $ 29,400 Cost of goods sold Sales commissions $ 2,940 S 16,170 S 13,230 ntribution margin Fixed costsStep 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