Question
LightUP Inc produces and sells lamps. Per unit Percent of sales Selling price 180 100 Variable expenses 54 30 CM 126 70 Fixed expenses are
LightUP Inc produces and sells lamps.
Per unit Percent of sales
Selling price 180 100
Variable expenses 54 30
CM 126 70
Fixed expenses are $505,000 per month. The company is currently selling 5,000 lamp units per month. 1. The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $16 per lamp unit. In exchange, the sales staff would accept an overall decrease in their salaries of $65,000 per month. Sales staff salaries expenses are considered fixed expenses. The marketing manager predicts that introducing this sales incentive would increase monthly sales by 100 units. What should be the overall effect on LightUP monthly net operating income of this change?
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