Question:

Which option would you recommend the manager to adopt? Hiring independent at a commission of 20% or hiring own sales team? and what are the reasons behind your decisions?

Proof 20% Commission Own Sales Force Break-even Sales 18,600,000.00 18,600,000.00 Less: Commission at 20%, 7.5% 3,720,000.00 1,395,000.00 Less: Variable Manufacturing Exp. 8,370,000.00 8,370,000.00 Contribution 6,510,000.00 8,835,000.00 Total Fixed cost 4,800,000.00 7,125,000.00 Net Income 1,710,000.00 1,710,000.00 Net Income is same