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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 on independent
Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own; rather, it relies on independent sales agents to market its products. These agents are paid a sales commission of 15% for all items sold. Barbara Cheney, Pittmans controller, just prepared the companys budgeted income statement for next year as follows: Pittman Company Budgeted Income Statement For the Year Ended December 31 Sales $ 24,500,000 Manufacturing expenses: Variable $ 11,025,000 Fixed overhead 3,430,000 14,455,000 Gross margin 10,045,000 Selling and administrative expenses: Commissions to agents 3,675,000 Fixed marketing expenses 171,500* Fixed administrative expenses 2,140,000 5,986,500 Net operating
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