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Sheridan Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission of 18% of sales.

Sheridan Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission of 18% of sales. The income statement for the year ending December 31, 2025, is as follows.

Sheridan Beauty Corporation

Income Statement

For the year Ended December 31, 2025

Sales $79,700,000
Cost of good sold
Variable $32,677,000
Fixed 8,500,000 41,177,000
Gross Profit $38,523,000
Selling and marketing expenses
Commissions $14,346,000
Fixed Costs 10,060,700 24,406,700
Operating income $14,116,300

The company is considering hiring its own sales staff to replace the network of agents. It will pay its salespeople a commission of 9% and incur additional fixed costs of $7,713,000.

a). Under the current policy of using a network of sales agents, calculate the Sheridan Beauty Corporations break-even point in sales dollars for the year 2025.

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