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Lionel Corporation manufactures pharmaceutical products sold through a network ofsales agents in the United States and Canada. The agents are currently paid an 18% commission on sales; that percentage was used when Lionel prepared the following budgeted income statement for the fiscal year ending June 30, 2019: _ _ Li'ohel. Corporation Budgeted 1:1an Statement For the 'I'fea'r" Ending June 33, 0319: E5599 id} Sales 5 23,?00 Cost of goods sold Variable 5 12,915 Fixed 3,444 16,359 Gross profit 5 12,341 Selling and administrative costs Commissions 5 5,165 Fixed advertising cost 351 Fixed administrative cost 2,296 3,323 Operating income 5 4,818 Fixed interest cost 1'18 Income before income taxes 5 3,300 Income taxes (30%) 993 Net income 3' 2.313 I Since the completion of the income statement, Lionel has learned that its sales agents are requiring a 5% increase in their commission rate [to 23%] for the upcoming year. As a result, Lionel's president has decided to investigate the possibility of hiring its own sales staff in place of the network of sales agents and has asked Alan Chen, Lionel's controller, to gather information on the costs associated with this change. Alan estimates that Lionel must hire eight salespeople to cover the current market area, at an average annual payroll cost for each employee of $80,000, including fringe benefits expense. Travel and entertainment expenses is expected to total $620,000 for the year, and the annuai cost of hiring a sales manager and sales secretary will be $160,000. In addition to their salaries, the eight salespeople will each earn commissions at the rate of 10% of sales. The president believes that Lionel also should increase its advertising budget by $520,000 if the eight salespeople are hired. Required 1. Determine Lionel's breakeven point (operating profit = 0) in sales dollars for the fiscal year ending June 30, 2019, if the company hires its own sales force and increases its advertising costs. Prove this by constructing a contribution income statement. 2. If Lionel continues to sell through its network of sales agents and pays the higher commission rate, determine the estimated volume in sales dollars that would be required to generate the operating profit as projected in the budgeted income statement. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine Lionel's breakeven point (operating profit = 0) in sales dollars for the fiscal year ending June 30, 2019, if the company hires its own sales force and increases its advertising costs. Prove this by constructing a contribution income statement. (Do not round intermediate calculations. Enter your answers in thousands of dollars.) Breakeven point (in sales dollars) Contribution Income Statement Sales $ 28,700 Variable costs: Cost of goods sold $ 12,915 Sales commissions $ 2,870 $ 15,785 $ 12,915 Fixed costs: 0 12,915Complete this question by entering your answers in the tabs below. Required 1 Required 2 If Lionel continues to sell through its network of sales agents and pays the higher commission rate, determine the estimated volume in sales dollars that would be required to generate the operating profit as projected in the budgeted income statement. (Do not round intermediate calculations. Enter your answers in thousands of dollars.) Estimated volume (in sales dollars)