Lionel Corporation manufactures pharmaceutlcal products sold through a network of sales agents in the United States and Canada. The agents are currently paid an 18% commisslon on sales; that percentage was used when Lionel prepared the following budgeted income statement for the fiscal year ending June 30, 2019: 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 hirling 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 assoclated with thls change. Alan estimates that Lionel must hire elght 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 entertalnment expenses Is expected to total $620,000 for the year, and the annual cost of hiring a sales manager and sales secretary will be $160,000. In addition to thelr salarles, the elght salespeople will each earn commissions at the rate of 10% of sales. The president belleves that Lionel also should increase Its advertising budget by $520,000 if the elght salespeople are hired. Required 1. 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 advertlsing 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 commlssion 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. 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.) 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. (Do not round intermediate calculations. Enter your answers in thousands of dollars.)