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Marathon Company makes and sells a single product. The current selling price is $$18$ per unit. Variable expenses are $$12$ per unit, and fixed expenses total $$36,000$ per month.

$($Unless otherwise stated, consider each requirement separately.$)$

Management is considering a change in the sales force compensation plan. Currently each of the firm's two salespeople is paid a salary of $$3,000$ per month.

Calculate the monthly operating income $($or loss$)$ that would result from changing the compensation plan to a salary of $$500$ per month, plus a commission of $$1$ per unit, assuming a sales volume of $7,200$ units per month.

Calculate the monthly operating income $($or loss$)$ that would result from changing the compensation plan to a salary of $$500$ per month, plus a commission of $$1$ per unit, assuming a sales volume of $8,000$ units per month.

Assuming that the sales volume of $8,000$ units per month achieved in part g could also be achieved by increasing advertising by $$1,200$ per month instead of changing the sales force compensation plan. What would be the operating income or loss?

g$-1.$ Calculate the monthly operating income $($or loss$)$ that would result from changing the compensation plan to a salary of $$500$ per month, plus a commission of $$1$ per unit, assuming a sales volume of $7,200$ units per month.

g$-2.$ Calculate the monthly operating income $($or loss$)$ that would result from changing the compensation plan to a salary of $$500$ per month, plus a commission of $$1$ per unit, assuming a sales volume of $8,000$ units per month.

h$-1.$ Assuming that the sales volume of $8,000$ units per month achieved in part g could also be achieved by increasing advertising by $$1,200$ per month instead of changing the sales force compensation plan. What would be the operating income or loss?

Which strategy would you recommend?

g$1$ Operating income $?$

g$2$ Operating income $?$

h$1$ Operating income $?$