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The Jurassic Classics has four employees on its sales team and uses a compensation that provides each

person with a base salary of $$46,400$ per year and the opportunity to earn commission on sales. The current

commission is $5\%$ of gross sales, and sales for the most recent period were $$2,900,000.$ Management is

considering making a change to the compensation system and wants to evaluate two possible alternatives:

going to a strictly commission$-$based compensation system and going to purely salary$-$based compensation.

The strictly commission$-$based method would eliminate the salary but raise the commission to $11\%$ of sales. If

the purely salary$-$based approach is adopted, the salary for each person would rise to $$81,200$ and the

commission would be eliminated.

Required:

Compute the total compensation of the sales team for all three options at $$2,320,000,$$$2,900,000,$ and $$3,320,000$ of total

sales.

What sales level would make management indifferent between the current compensation structure and the strictly

commission$-$based structure? What is the point of indifference between the current structure and the pure salary$-$based

structure?