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Required information [The following information applies to the questions displayed below.] Consolidated Industries is studying the addition of a new valve to its product
Required information [The following information applies to the questions displayed below.] Consolidated Industries is studying the addition of a new valve to its product line. The valve would be used by manufacturers of irrigation equipment. The company anticipates starting with a relatively low sales volume and then boosting demand over the next several years. A new salesperson must be hired because Consolidated's current sales force is working at capacity. Two compensation plans are under consideration: Plan A: An annual salary of $22,000 plus a 10% commission based on gross dollar sales. Plan B: An annual salary of $66,000 and no commission. Consolidated Industries will purchase the valve for $50 and sell it for $80. Anticipated demand during the first year is 6,000 units. (In the following requirements, ignore income taxes.) Required: 1. Compute the break-even point in units for Plan A and Plan B. Break-Even Point Plan A units Plan B units
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