"That's the last straw. Karl replied angrily. "Those agents have been demanding more and more, and this time they've gone too far. How can they possibly defend a 20% commission rate? "They claim that after paying for advertising, travel, and the other costs of promotion, there's nothing left over for profit." replied Barbara "I say it's just plain robbery" retorted Karl. "And I also say it's time we dumped those guys and got our own sales force. Can you get your people to work up some cost figures for us to look at?" "We've already worked them up." said Barbara, "Several companies we know about pay a 75% commission to their own salespeople, along with a small salary. Of course, we would have to handle all promotion costs, too. We figure our fixed expenses would increase by $3.525,000 per year, but that would be more than offset by the $4700,000 (20% * $23,500,000) that we would avoid on agents' commissions." The breakdown of the $3,525,000 cost follows: Salaries: Sales Manager Salespersons Travel and entertainment Advertising Total $ 146,875 881,250 587,500 1.909.375 $3,525,000 *Super,' replied Karl "And I noticed that the $3.525 000 equals who were paying the agents under the old 15% commission rate." it's even better than that," explained Barbara. "We can actually save $108,100 o year because that's what we're paying our auditors to check out the agents reports. So our overall administrative expenses would be less Pull all of these numbers together and we'll show them to the executive committee tomorrow, sald Kart With the approval of the committee, we con move on the matter immediately