ipaigin ll have no i Home Brewer model The 7. company is considering adding a new product to its line of br use market. The new brewer, the Office Plus, would sell for $ Per have variable unit costs of s160. Introducing the new model would in S102000 annually and would reduce annual unit sales of the Orscrease fixd many units of the Office Plus model would need to be sold Hornd to justify it ewer the product line next year? CASE 4-34 Cost Structure: Break-Even Point: Target Profits ILO4. t through a network of independent sales agents located in the Uited Statee sold to sales t Corporation manufactures multi-function photocopiers that agents sell a variety of products to businesses in addition to C and photocopiers. The sales agents are currently paid a 19% c mission rate was ommission or ents multi es, and Sa used when Crescents management prepared the following b geted statement for the upcoming year Sales Cost of goods sold Variable Fiued 1400000 Gross margin Selling and administrative expenses: Fixed advertising expense Fixed administrative expense 2850000 400000 1600000 Operating income Since the completion of the above statement. Crescent's manage the independent sales agents are demanding an increase in the commission rate t ment has learned sales for the upcoming year. This would be the third increase in commissio the independent sales agents in five years. As a result, Crescent's management has investigate the possibility of hiring its own sales staff to replace the agents ns demanded independent salk Crescent's controller estimates that the company would have to hire six salespe cover the current market area. and the total annual payroll cost of these employees woul about $350.000, including benefits. The salespeople would also be paid commissions of 12 sales. Travel and entertainment expenses are expected to total about $200,000 for the year company would also have to hire a sales manager and support staff, whose salaries and ber fits would total $100.000 per year. To make up for the promotions that the independent sa agents had been running on behalf of Crescent, management believes that the company's b get for fixed advertising expenses should be increased by $250.000. quired 1. Assuming sales of $15,000.000, construct a budgeted contribution format income st ment for the upcoming year for each of the following alternatives: The independent sales agents' commission rate remains unchanged at 19 The independent sales agents' commission rate increases to 22%. The company employs its own sales force. a. c. 2. Calculate Crescent Corporation's break-even point in sales dollars for the upcoming assuming the following: a. The independent sales agents' commission rate remains unchanged at 19%