Q1

Pear and Crease Corporation ("P&C") manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission of 16.25% of sales. This is option A, with forecast income statement for the year ending December 31, 2020 appended below:

PEAR AND CREASE CORPORATION Forecast Income Statement For the Year Ending December 31, 2020 Sales $120,000,000 Cost of goods sold Variable $58,500,000 Fixed 11,000,000 69,500,000 Gross margin 50,500,000 Selling and marketing expenses Commissions 19,500,000 Fixed costs 10,000,000 29,500,000 Operating income $21.000,000