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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
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. The statement follows: Pittman is considering employing its own sales force. Salespersons will be paid a small fixed salary and a commission, which is determined by the industry practice. Such a change will increase the fixed marketing expenses. The new numbers are: Determine the sales at which net income would be equal regardless of whether Pittman Company sells through agents (at a 15% commission rate) or employs its own sales force. Choose the closest answer. $ 7.810 $ 20,500 $ 21,200 $ 31,238 $16.000
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