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Ivanhoe Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission of 18% of sales.

Ivanhoe Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission of 18% of sales. The income statement for the year ending December 31, 2022, is as follows.

IVANHOE BEAUTY CORPORATION Income Statement For the Year Ended December 31, 2022

Sales

$ 79,300,000

Cost of goods sold

Variable

$ 31,720,000

Fixed

8,540,000 40,260,000

Gross profit

$ 39,040,000

Selling and marketing expenses

Commissions

$ 14,274,000

Fixed costs

10,750,600 25,024,600

Operating income

$ 14,015,400

The company is considering hiring its own sales staff to replace the network of agents. It will pay its salespeople a commission of 10% and incur additional fixed costs of $ 6,344,000.

(a)

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Under the current policy of using a network of sales agents, calculate the Ivanhoe Beauty Corporations break-even point in sales dollars for the year 2022.

Break-even point

$ enter the break-even point in dollars

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(b)

Calculate the companys break-even point in sales dollars for the year 2022 if it hires its own sales force to replace the network of agents.

Break-even point

$ enter the break-even point in dollars

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