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Michelangelo, the VP of Sales and Deals has recently suggested that paying salespersons with a sales commission of $200 per unit sold, rather than the
Michelangelo, the VP of Sales and Deals has recently suggested that paying salespersons with a sales commission of $200 per unit sold, rather than the flat salaries of $100,000 a month would increase his firms unit sales (currently 1,000) by 20%. Based on the table above, what effect would this action have on his firm's net operating income?
A. Increase of $4,000
B. Increase of $14,000
C. Decrease of $14,000
D. No effect
E. Decrease of $4,000
Account Sales (1,000 Paintings) Variable expenses Contribution Margin Fixed expenses Net operating income Total $1,200,000 $480,000 $720,000 $600,000 $120,000 Per unit $1,200 $480 $720Step by Step Solution
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