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Marathon Company makes and sells a single product. The current selling price is $18 per unit. Variable expenses are $12 per unit, and fixed expenses
Marathon Company makes and sells a single product. The current selling price is $18 per unit. Variable expenses are $12 per unit, and fixed expenses total $36,000 per month. (Unless otherwise stated, consider each requirement separately.) Management is considering a change in the sales force compensation plan. Currently each of the firm's two salespeople is paid a salary of $3,000 per month. H 1. Calculate the monthly operating income (or loss) that would result from changing the compensation plan to a salary of $500 per month, plus a commission of $1 per unit, assuming a sales volume of 7,200 units per month. H 2. Calculate the monthly operating income (or loss) that would result from changing the compensation plan to a salary of $500 per month, plus a commission of $1 per unit, assuming a sales volume of 8,000 units per month. G 1. Assuming that the sales volume of 8,000 units per month achieved in part g could also be achieved by increasing advertising by $1,200 per month instead of changing the sales force compensation plan. G 2. What would be the operating income or loss? Which strategy would you recommend
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