Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please solve this question ASAP I have assignment due Klyne Corporation manufactures pharmaceutical products that are sold through a network of sales agents. The agents
please solve this question ASAP I have assignment due
Klyne Corporation manufactures pharmaceutical products that are sold through a network of sales agents. The agents are paid a commission of 21% of sales. The income statement for the year ending December 31, 2020, is as follows: 17:55 $ 27,500,000 KLYNE CORPORATION Income Statement For the Year Ending December 31, 2020 Sales Cost of goods sold Variable $13, 200,000 Fixed 2,873,000 Gross margin Selling and marketing expenses Commissions 5,775,000 Fixed costs 3,345,000 Operating income k 16,073, 000 11,427,000 9,120,000 2,307,000 Klyne is considering hiring its own sales staff to replace the network of agents. Klyne will pay its salespeople a commission of 15% and incur fixed costs of $2,083,000. Required: 1. Calculate Klyne Corporation's break-even point in sales dollars for the year 2020. (Round your answer to 2 decimal places.) Break-even point Help 2. Calculate Klyne Corporation's break-even point in sales dollars for the year 2020 if the company had hired its own sales force to replace the network of agents. (Round your answer to 2 decimal places.) Break-even point 3. Calculate the degree of operating leverage at sales of $27,500,000, considering (a) Klyne uses sales agents and (b) Klyne employs its own staff. Describe the advantages and disadvantages of each alternative. (Round your answers to 2 decimal places.) Degree of Operating Leverage Using sales agent Employing own sales staff 4. If Klyne increases the commission paid to its sales staff to 20%, keeping all other costs the same, how much revenue (in dollars) would Klyne have to generate to earn the same operating income it did in 2020? (Round your answer to 2 decimal places.) Revenue (in dollars) 3. Calculate the degree of operating leverage at sales of $27,500,000, considering (a) Klyne uses sales agents and (b) Klyne employs its own staff. Describe the advantages and disadvantages of each alternative. (Round your answers to 2 decimal places.) Degree of Operating Leverage Using sales agent Employing own sales staff 4. If Klyne increases the commission paid to its sales staff to 20%, keeping all other costs the same, how much revenue (in dollars) would Klyne have to generate to earn the same operating income it did in 2020? (Round your answer to decimal places.) Revenue (in dollars)Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started