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Martin Corporation manufactures housewares products that are sold through a network of external sales agents. The agents are paid a commission of 19% of revenues.
Martin Corporation manufactures housewares products that are sold through a network of external sales agents. The agents are paid a commission of 19% of revenues. Martin is considering replacing the sales agents with its own salespeople, who would be paid a commission of 10% of revenues and total salaries of $2,160,000. The income statement for the year ending December 31,2017 , under the two scenarios is shown here. (Click the icon to view the income statements.) Read the requirements. Requirement 1. Calculate Martin's 2017 contribution margin percentage, breakeven revenues, and degree of operating leverage under the two scenarios. Begin by calculating Martin's 2017 contribution margin percentage. Determine the formula, then enter the amounts to calculate the percentage. (Round the percentage to the nearest whole percent.) Calculate Martin's 2017 breakeven point in revenues. Begin by determining the formula, then enter the amounts to calculate the breakeven points. (Enter applicable percentages as as percentage rounded to the nearest whole percent. Round your answer up to the nearest whole dollar.) Calculate Martin's 2017 operating leverage. (Round your answer to two decimal places.) Requirement 2. Describe the advantages and disadvantages of each type of sales alternative. Requirement 2. Describe the advantages and disadvantages of each type of sales alternative. The calculations indicate that at sales of $24,000,000, a percentage change in sales and contribution margin will result times that in percentage in if Martin continues to use sales agents and times that percentage change in if Martin employs its own sales staff. Data table Requirements 1. Calculate Martin's 2017 contribution margin percentage, breakeven revenues, and degree of operating leverage under the two scenarios. 2. Describe the advantages and disadvantages of each type of sales alternative. 3. In 2018, Martin uses its own salespeople, who demand a 15% commission. If all other cost behavior patterns are unchanged, how much revenue must the salespeople generate in order to earn the same operating income as in 2017
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