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Klyne Corporation manufactures pharmaceutical products that are sold through a network of sales agents. The agents are paid at commission of 18% of sales. The

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Klyne Corporation manufactures pharmaceutical products that are sold through a network of sales agents. The agents are paid at commission of 18% of sales. The income statement for the year ending December 31, 2020, is as follows: KLYNE CORPORATION Income Statement For the Year Ending December 31, 2020 Sales $36,000,000 Cost of goods sold Variable $16,200,000 Fixed 3,069,400 19,269,400 Gross margin 16,730,600 Selling and marketing expenses Commissions 6,480,000 Fixed costs. 3,820,000 10,100,000 $6,430,600 Operating income Klyne is considering hiring its own sales staff to replace the network of agents. Klyne will pay its salespeople a commission of 10% and incur fixed costs of $2,080,000. Required: 1. Calculate Klyne Corporation's break-even point in sales dollars for the year 2020. (Round your answer to 2 decimal places.) Break-even point 2. Calculate Klyne Corporation's break-even point in sales dollars for the year 2020 if the company had hired its own sales force to replace the network of agents. (Round your answer to 2 decimal places.) Break-even point 3. Calculate the degree of operating leverage at sales of $36,000,000, considering (a) Klyne uses sales agents and (b) Klyne employs its own staff. Describe the advantages and disadvantages of each alternative. (Round your answers to 2 decimal places.) Degree of Operating Leverage Using sales agent Employing own sales staff 4. If Klyne increases the commission paid to its sales staff to 15%, keeping all other costs the same, how much revenue (in dollars) would Klyne have to generate to earn the same operating income it did in 2020? (Round your answer to 2 decimal places.) Revenue (in dollars)

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