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Mello Corporation manufactures housewares products that are sold through a network of external sales agents. The agents are paid a commission of 18% of revenues.

Mello Corporation manufactures housewares products that are sold through a network of external sales agents. The agents are paid a commission of 18% of revenues. Mello is considering replacing the sales agents with its own salespeople, who would be paid a commission of 10% of revenues and total salaries of $2,000,000. The income statement for the year ending December 31, 2020, under the two scenarios is shown here.

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