Marston Corporation manufactures disposable thermometers that are sold to hospitals through a network of independent sales agents located in the United States and Canada. These sales agents sell a variety of products to hospitals in addition to Marston's disposable thermometer The sales agents are currently paid an 17% commission on sales, and this commission rate was used when Marston's management prepared the following budgeted absorption income statement for the upcoming year Marston Corporation Budgeted Income Statement Sales $ 32,000,000 Cost of goods sold Variable S 17,500,000 Fixed 2,750,000 20,250,000 Gross margin 11,750,000 Selling and administrative expenses Commissions 5.440,000 Fixed advertising expense 730,000 Fixed administrative expense 3 000 000 9,170,000 Net operating income $ 2,580,000 Since the completion of the above statement Marston's management has learned that the independent sales agents are demanding an increase in the commission rate to 19% of sales for the upcoming year This would be the third increase in commissions demanded by the independent sales agents in five years. As a result, Marston's management has decided to investigate the possibility of hiring its own sales staff to replace the independent sales agents Marston's controller estimates that the company will have to hire eight salespeople to cover the current market area, and the total annual payroll cost of these employees will be about 5660,000, including fringe benefits. The salespeople will also be paid commissions of 10% of sales Travel and entertainment expenses are expected to total about $360,000 for the year. The company will also have to hire a sales manager and support staff whose salaries and fringe benefits will come to $170,000 per year. To make up for the promotions that the independent sales agents had been running on behalf of Marston management believes that the company's budget for fixed advertising expenses should be increased by $410,000 2. Calculate Marston Corporation's break-even point in sales dollars for the upcoming year assuming the following a. The independent sales agents' commission rate remains unchanged at 17% (Round the CM ratio to 2 decimal places and final answer to the nearest dollar amount. Enter your answers in whole dollars and not in thousands.) Break-even point in sales dollars b. The independent sales agents commission rate increases to 19% (Round the CM ratio to 2 decimal places and final answer to the nearest dollar amount. Enter your answers in whole dollars and not in thousands.) Break-even point in sales dollars c. The company employs its own sales force. (Round the CM ratio to 2 decimal places and final answer to the nearest dollar amount. Enter your answers in whole dollars and not in thousands) Break even point in sales dollars 3. Refer to your answer to (1xb) above if the company employs its own sales force, what volume of sales would be necessary to generate the net operating income the company would realize if sales are $32,000,000 and the company continues to sell through agents (at a 19% commission rate)? (Round the CM ratio to 2 decimal places and final answer to the nearest dollar amount. Enter your answers in whole dollars and not in thousands.) Volume of sales 4. Determine the volume of sales at which net operating income would be equal regardless of whether Marston Corporation sells through agents (at a 19% commission rate) or employs its own sales force [Round the CM ratio to 2 decimal places and final answer to the nearest dollar amount. Enter your answers in whole dollars and not in thousands.) Volume of sales References eBook & Resources