Question
The ABC Distributing ( ABC ) 2019 profit and loss statement is shown below. The depicted relationships are valid within $14,000,000.00 to $65,000,000.00. What level
The ABC Distributing (ABC) 2019 profit and loss statement is shown below. The depicted relationships are valid within $14,000,000.00 to $65,000,000.00. What level of sales would a new salesperson have to produce if annual costs (salary, expenses, and other traceable costs) were $60,000 and ABC wanted to make a 10% return (ROS) on the incremental sales?
ABC 2019 Profit and Loss Statement*
Sales | $ | 20,000,000 |
Cost of goods sold |
| 12,000,000 |
Gross margin |
| 8,000,000 |
Variable costs |
| 2,000,000 |
Fixed costs |
| 5,000,000 |
Total costs |
| 7,000,000 |
Profit (before taxes) | $ | 1,000,000 |
*Taxes are eliminated from the analysis to simplify and focus the calculations.
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