make a recommendation as to whether the company should continue to use sales agents...or employ its own sales force.

$19,500,000 SlaltiTICUL IUI TIEAL ytai as IUIIUVVS. Pittman Company Budgeted Income Statement For the Year Ended December 31 Sales Manufacturing expenses : Variable $8,775,000 Fixed overhead 2,730,000 Gross margin Selling and administrative expenses : Commissions to agents 2,925,000 Fixed marketing expenses 136,500+ Fixed administrative expenses 1,940,000 Net operating income Fixed interest expenses Income before income taxes Income taxes (30%) Net income 11,505,000 7,995,000 5,001,500 2,993,500 682,500 2,311,000 693,300 $ 1,617,700 Salaries: Sales manager Salespersons Travel and entertainment Advertising $ 121,875 731,250 487,500 1,584,375 $ 2,925,000 Total Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own; rather, it relies completely on independent sales agents to market its products. These agents are paid a sales commission of 15% for all items sold. Barbara Cheney, Pittman's controller, has just prepared the company's budgeted income statement for next year as follows