Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Required information Problem 12-25 (Algo) CVP analysis-what-if questions; breakeven LO 12-7, 12-8, 12-9, 12-10 [The following information applies to the questions displayed below.] Marathon Company
Required information Problem 12-25 (Algo) CVP analysis-what-if questions; breakeven LO 12-7, 12-8, 12-9, 12-10 [The following information applies to the questions displayed below.] Marathon Company makes and sells a single product. The current selling price is $19 per unit. Variable expenses are $11.4 per unit, and fixed expenses total $55,240 per month. (Unless otherwise stated, consider each requirement separately.) Problem 12-25 (Algo) Part g \& h Management is considering a change in the sales force compensation plan. Currently each of the firm's two salespeople is paid a salary of $2,500 per month. g. 1. Calculate the monthly operating income (or loss) that would result from changing the compensation plan to a salary of $400 per month, plus a commission of $0.9 per unit, assuming a sales volume of 7,400 units per month. 2. Calculate the monthly operating income (or loss) that would result from changing the compensation plan to a salary of $400 per month, plus a commission of $0.9 per unit, assuming a sales volume of 7,000 units per month. h. 1. Assuming that the sales volume of 7,000 units per month achieved in part g could also be achieved by increasing advertising by $1,000 per month instead of changing the sales force compensation plan. What would be the operating income or loss? 2. Which strategy would you recommend? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. g-1. Calculate the monthly operating income (or loss) that would result from changing the compensation plan to a salary of $400 per month, plus a commission of $0.9 per unit, assuming a sales volume of 7,400 units per month. Note: Do not round intermediate calculations. g-2. Calculate the monthly operating income (or loss) that would result from changing the compensation plan to a salary of $400 per month, plus a commission of $0.9 per unit, assuming a sales volume of 7,000 units per month. Note: Do not round intermediate calculations. Losses should be indicated by a minus sign. h1. Assuming that the sales volume of 7,000 units per month achieved in part g could also be achieved by increasing advertising by $1,000 per month instead of changing the sales force compensation plan. What would be the operating income or loss? Note: Do not round intermediate calculations. Losses should be indicated by a minus sign
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