Required:

$1.$ Compute Pittman Companys break$-$even point in dollar sales for next year assuming:

a$.$The agents commission rate remains unchanged at $15\%.$

b$.$ The agents commission rate is increased to $20\%.$

c$.$ The company employs its own sales force.

$2.$ Assume that Pittman Company decides to continue selling through agents and pays the $20\%$ commission rate. Determine the dollar sales that would be required to generate the same net income as contained in the budgeted income statement for next year.

$3.$ Determine the dollar sales at which net income would be equal regardless of whether Pittman Company sells through agents $($at a $20\%$ commission rate$)$ or employs its own sales force.

$4.$ Compute the degree of operating leverage that the company would expect to have at the end of next year assuming:

a$.$The agents commission rate remains unchanged at $15\%.$

b$.$ The agents commission rate is increased to $20\%.$

c$.$ The company employs its own sales force.

Use income before income taxes in your operating leverage computation.