Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own; rather, it relies completely on independent sales agents to market its products. These agents are paid a sales commission of 15% for all items sold. Barbara Cheney, Pittman's controller, has just prepared the company's budgeted income statement for next year as follows: Pittaan Budgeted Incone Staterent For the Year Ended Decerber 31 Sales 18, 500,000 Manufacturing expenaes: Variable Fixed overhead 8, 325, 000 2, 590, 000 10,915,000 Gross margin Selling and administrative cxpenaes: Comnissions to agentS ixed marketing expenaca ixed adninistrative expenses 2,775, 000 129, 500 1, 900, 000 4,804,500 647,500 639,900 Net operating incone Eixed interest expenses Incore before incone taxe:s income taxe (30%) et incore 8 1,493,100 "Primarily depreciation on storage facilities. As Barbara handed the statement to Karl Vecc, Pittman's president, she commented, ? went ahead and used the agents, 15% commission rate in completing these statements, but we've just learned that they refuse to handle our products next year unless we increase the commission rate to 20%." That's the last straw." Karl replied angrily. Those agents have been demanding more and more, and this time they've gone too far How can they possibly defend a 20% commission rate