*Primarily depreciation on storage facilities. As Barbara handed the statement to Karl Vecci, Pittman's president, she commented, \"I went ahead and used the agents' 15% commission rate in completing these statements, but we've just learned that they refuse to handle our products next year unless we increase the commission rate to 20%." That's the last straw," Karl replied angrily. "Those agents have been demanding more and more, and this time they've gone too far. How can they possibly defend a 20% commission rate?" 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 sales force. 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 7.5% commission to their own salespeople, along with a small salary. Of course, we would have to handle all promotion costs, too. We figure our fixed expenses would increase by $2,400,000 per year, but that would be more than offset by the $3,200,000 (20% x $16,000,000) that we would avoid on agents' commissions." The breakdown of the $2,400,000 cost follows: Salaries: Sales manager $ 100,000 Salespersons 600,000 Travel and entertainment 400,000 Advertising 1,300,000