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Montery Co. make and sells a single product. The current selling price is $15 per unit. Variable expenses are $9 per uniy, and fixed expenses
Montery Co. make and sells a single product. The current selling price is $15 per unit. Variable expenses are $9 per uniy, and fixed expenses total $27,000 per month. Management is considering a change in the sales force compensation plan. Currently each of thr firm's two salepeople is paid a salary of $2,500 per month. g-1. Calculate the monthly operating income that would result from changing the compensation plan to a salary of $400 per month, plus a commission of $0.80 per unit, assuming a sale volume of 5,400 units per month. g-2. Calculate the monthly operating income that would result from changing the compensation plan to a salary of $400 per month, plus a commission of $0.80 per unit, assuming a sales volume of 6,000 units per month. h-1. Assuming that the sales volume of 6,000 units per month achieved in part g could also be acheived by increasing advertising by $1,000 per month instead of changing the sales force compensation plan. What would be the operating income or loss ?
Management is considering a change in the sales force compensation plan. Currently each of thr firm's two salepeople is paid a salary of $2,500 per month.
g-1. Calculate the monthly operating income that would result from changing the compensation plan to a salary of $400 per month, plus a commission of $0.80 per unit, assuming a sale volume of 5,400 units per month.
g-2. Calculate the monthly operating income that would result from changing the compensation plan to a salary of $400 per month, plus a commission of $0.80 per unit, assuming a sales volume of 6,000 units per month.
h-1. Assuming that the sales volume of 6,000 units per month achieved in part g could also be acheived by increasing advertising by $1,000 per month instead of changing the sales force compensation plan. What would be the operating income or loss ?
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