Lionel Corporation manufactures pharmaceutical products sold through a network of sales agents in the United States and Canada. The agerlts are currently paid an 18% commission on sales; that percentage was used when Lionel prepared the following budgeted income statement for the fiscal year ending June 30, 2019: Lionel Corporation Budgeted Income Statement For the YEar Ending June 36, 2919 [$630 omitted) Sales 5 23,960 Cost of goods sold Variable 5 13,005 Fixed 3,468 16,433 Gross profit 5 12,42? Selling and administrative costs Commissions 5 5,202 Fixed advertising cost 85? Fixed administrative cost 2,312 3,381 Operating income 5 4,346 Fixed interest cost T23 Income before income taxes 5 3,323 Income taxes (38%) 99? Net income 5 2,325 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 resultr 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 $640,000 for the year, and the annual cost of hiring a sales manager and sales secretary will be $170,000. 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 $540,000 if the eight salespeople are hired. Required 1. Determine Lionel's breakeven point [operating profit = 0] in sales dollars for the scal 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 1 Required 2 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.) Breakeven point (in sales dollars) Contribution Income Statement Sales $ 28,900 Variable costs: Cost of goods sold $ 13,005 Sales commissions 2,890 15,895 Contribution margin 13,005 Fixed costs: Cost of goods sold 3,468 Exisiting 3.468 Operating income CA 9,537 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 $640,000 for the year, and the annual cost of hiring a sales manager and sales secretary will be $00,000. 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 $540,000 if the eight salespeople are hired. Required 1. Determine Lionel's breakeven poirlt [operating prot = 0} in sales dollars for the scal year ending June 30, 2019, ifthe 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 ofsales 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 1 Required 2 If Lionel continues to sell through its network of sales agents and pays the higher commission late, determine the estimated volume in sales dollars that would be required to generate the operating prot as projected in the budgeted income statement. (Do not round intermediate calculations. Enter your answers in thousands of dollars.)