Since the completion of the income statement, Lionel has learned that its sales agents are requiring a $5\%$ increase in their commission Lionel Corporation manufactures pharmaceutical products sold through a network of sales agents in the United States and Canada.

The agents are currently paid an $18\%$ commission on sales; that percentage was used when Lionel prepared the following budgeted

income statement for the fiscal year ending June $30,2022$:

Since the completion of the income statement, Lionel has learned that its sales agents are requiring a $5\%$ increase in their commission

rate $($to $23\%)$ for the upcoming year. As a result, Lionel's president has decided to investigate the possibility of hiring its own sales staff

in place of the network of sales agents and has asked Alan Chen, Lionel's controller, to gather information on the costs associated with

this change.

Alan estimates that Lionel must hire eight salespeople to cover the current market area, at an average annual payroll cost for each

employee of $$80,000,$ including fringe benefits expense. Travel and entertainment expenses are expected to total $$790,000$ for the

year, and the annual cost of hiring a sales manager and sales secretary will be $$245,000.$ In addition to their salaries, the eight

salespeople will each earn commissions at the rate of $10\%$ of sales. The president believes that Lionel also should increase its

advertising budget by $$690,000$ if the eight salespeople are hired.

Required:

Determine Lionel's breakeven point $($operating profit $=0)$ in sales dollars for the fiscal year ending June $30,2022,$ if the company

hires its own salesforce and increases its advertising costs. Prove this by constructing a contribution income statement.

If Lionel continues to sell through its network of sales agents and pays the higher commission rate, determine the estimated volume

in sales dollars that would be required to generate the operating profit as projected in the budgeted income statement.

Complete this question by entering your answers in the tabs below.

If Lionel continues to sell through its network of sales agents and pays the higher commission rate, determine the estimated

volume in sales dollars that would be required to generate the operating profit as projected in the budgeted income

statement. $($Do not round intermediate calculations. Enter your answers in thousands of dollars.$)$

rate $($to $23\%)$ for the upcoming year. As a result, Lionel's president has decided to investigate the possibility of hiring its own sales staff

in place of the network of sales agents and has asked Alan Chen, Lionel's controller, to gather information on the costs associated with

this change.

Alan estimates that Lionel must hire eight salespeople to cover the current market area, at an average annual payroll cost for each

employee of $$80,000,$ including fringe benefits expense. Travel and entertainment expenses are expected to total $$790,000$ for the

year, and the annual cost of hiring a sales manager and sales secretary will be $$245,000.$ In addition to their salaries, the eight

salespeople will each earn commissions at the rate of $10\%$ of sales. The president believes that Lionel also should increase its

advertising budget by $$690,000$ if the eight salespeople are hired.

Required:

Determine Lionel's breakeven point $($operating profit $=0)$ in sales dollars for the fiscal year ending June $30,2022,$ if the company

hires its own salesforce and increases its advertising costs. Prove this by constructing a contribution income statement.

If Lionel continues to sell through its network of sales agents and pays the higher commission rate, determine the estimated volume

in sales dollars that would be required to generate the operating profit as projected in the budgeted income statement.

Complete this question by entering your answers in the tabs below.

Determine Lionel's breakeven point $($operating profit $=0)$ in sales dollars for the fiscal year ending June $30,2022,$ if the

company hires its own salesforce and increases its advertising costs. Prove this by constructing a contribution income

statement. $($Do not round intermediate calculations. Enter your answers in thousands of dollars.$)$