Please advise:

Pitman company is a small but growing at manufacturer of telecommunications equipment. The company has no salesforce of its own rather it realize completely independent sales agents to market its products. These agents are paid a sales commission a 15% for all items sold. Barbara Chaney, Pittmans controller, has just prepare the company budgeted income statement for next year as follows as follows

Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own rather, it relles 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: Pitta Company Budgeted Income Statement For the Year Ended December 31 Manufacturing expenses $ 24,500,000 Variable $ 11,025,000 Fived overhead 260,000 Grossargi 10.455.000 10,045,000 Selling and waistrative expenses Comissions to agents 3,675,000 Farketing 171.500 Fixed dinistrative 2,140,000 1956,500 Not rate incon 4,050, 500 interest was 2.100 Inces before it 7,201.000 TC) 260.00 ins 24.00 Primary depreciation on storage facilities D As Barbara handed the statement to Karl Vecci Pitman's president, the commented. I went head and used the agents Commission rate in completing these statements, but we've just learned that they refuse to handle our products next year new increase the commission rate to 2017 "That's the last straw." Kart replied angry Those wents have been demanding more and more and the time meyve gone to How can they possibly defend a 20% comte The matter Daving for advertise and the other cost of content Wabon.com/ext/map/index.html con conexternal browser=0&launchili https253A%252F%252Fdavenport blackboard.com/252Fwebap 3 Sase Saved Help Save & Exit Su "They claim that after paying for advertising, travel and the other costs of promotion, there's nothing left over for profit" replied Barbara I say it's just plain robbery." retorted Karl. "And I also say it's time we dumped those guys and got our own salesforce. Can you get your people to work up some cost figures for us to look at?" "We've already worked them up." said Barbara, "Several companies we know about pay a 75% commission to their own salespeople. along with a small salary. Of course, we would have to handle all promotion costs, too. We figure out fixed expenses would increase by 53.675.000 per year, but that would be more than offset by the $4.900,000 (20%* $24.500.000) that we would avold on agents commissions The breakdown of the $3,675,000 cost follows Salaries Sales manager 153.135 Salesperson 18.750 Travel tanti 613,00 Advertisine 1,000,00 $3,675,000 *Super" replied Karl And I noticed that the $3,675,000 equals what we're paying the agents under the old 15 como i's even better than that explained Barbar. We can actually save $112.700 a year because than what were paying out furto check out the agents reports. So our overall administrative expenses would be less "Pull all of these numbers together and we'll show them to the executive committee on Kart with the approval of the we can move on the matter immediately w/ Committee tomorrow," said Karl With the approval of the me, we can move on the matter immediately Required: 1. Compute Pittman Company's break even point in dollar sales for next year assuming 3. The agents commission rate remains unchanged at 15% b. The agents commission rate is increased to 20% c. The company employs its own sales force 2. Assume that Pittman Company decides to continue selling through agents and pays the 20% commission rate. Determine the dollar sales that would be required to generate the same net income as contained in the budgeted income statement for next year 3. Determine the door sales at which net income would be equal regardless of whether Pittman Company sets through agents at a 20% commission rate or employs its own salesforce. 4. Compute the decree of operating leverage that the company would expect to have at the end of next year assuming a. The agents comersion rate remains unchanged at 15 b. The agents common rate is increased to 20% The company employs is own salesforce. Use income before income taxes in your operating leverage computation Complete this test by entering your answers in the tabs below 2 Compute them that the competente be income your converge company ME by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Compute the degree of operating leverage that the company would expect to have at the end of next year assuring: (Use income before income taxes in your operating leverage computation.) (Round your answers to 2 decimal places.) Degree of Operating Leverage 9.800.00 The agents' commission rate remains unchanged at 15% b. The agents commission rate is increased to 20% C. The company employs its own sales force 306 E Taw Not 35. Su ore to search Use Income before income taxes in your operating leverage computation Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Assume that Pittman Company decides to continue selling through agents and pays the 20% commission rate. Determine the dollar sales that would be required to generate the same net income as contained in the budgeted income statement for next Year. (Round CM ratio to 3 decimal places and final arwiwer to the nearest dollar amount.) Volume of stondo) Prov 11 Next SYS Complete this question by entering your answers in the tabs below. Required 1 Required 2 Realized Required 4 Determine the dollar sales at which net income would be equal regardless of whether Pittman Company sells through agents (at a 20% commission rate) or employs its own sales force. (Do not found intermediate calculations) Vusame an optar C Prov 1 of 1 to och 3597 Smy diswers in the tabs below. Required 1 Required 2 Required 3 Required 4 Compute the degree of operating leverage that the company would expect to have at the end of next year assuming: (Use Income before income taxes in your operating leverage computation.) (Round your answers to 2 decimal places) Degree of Operating Leverage 9,800.00 The agents comision rate remains unchanged at 15% The wants' commission rate is increased to 20% The company employs its own salos force 305 E Taw Not 35. Su ore to search Use Income before income taxes in your operating leverage computation Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Assume that Pittman Company decides to continue selling through agents and pays the 20% commission rate. Determine the dollar sales that would be required to generate the same net income as contained in the budgeted income statement for next Year. (Round CM ratio to 3 decimal places and final arwiwer to the nearest dollar amount.) Volume of stondo) Prov 11 Next SYS Complete this question by entering your answers in the tabs below. Required 1 Required 2 Realized Required 4 Determine the dollar sales at which net income would be equal regardless of whether Pittman Company sells through agents (at a 20% commission rate) or employs its own sales force. (Do not found intermediate calculations) Vusame an optar C Prov 1 of 1 to och 3597 Smy diswers in the tabs below. Required 1 Required 2 Required 3 Required 4 Compute the degree of operating leverage that the company would expect to have at the end of next year assuming: (Use Income before income taxes in your operating leverage computation.) (Round your answers to 2 decimal places) Degree of Operating Leverage 9,800.00 The agents comision rate remains unchanged at 15% The wants' commission rate is increased to 20% The company employs its own salos force 305