The company sells many styles of earrings, but all are sold for the same price- S15 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings): \begin{tabular}{|c|c|c|c|} \hline Janyay (ecture) & 22200 & June (budaed) & 51200 \\ \hline Februgr (chue) & 27,20 & Julouged & 21200 \\ \hline March (ectur) & 41,200 & Acrustiouden) & 31,200 \\ \hline Apriloud & 66300 & Sectember oudoy & 20200 \\ \hline War (6udas) & 101,200 & & \\ \hline \end{tabular} The concentration of sales before and during May is due to Mother's Day. Sulficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month. Suppliers are paid \$4.20 for a pair of earrings. One-half of a month's purchases is paid for in the month of purchase; the other half is paid for in the following month. Al sales are on credit. Only 20% of a month's sales are collected in the month of sale. An addlitional 70% is collected in the following month, and the remaining 10% is collected in the second month following sale, Bad debts have been negligible. Monthly operating expenses for the company are given below: \begin{tabular}{|c|c|c|c|} \hline & & & \\ \hline Selacomintan & & 4 & \\ \hline Fued: & & & \\ \hline Actrent 19 & 3 & 24000 & \\ \hline Fint & E] & 2200 & \\ \hline & ES & storos & \\ \hline & ES & & \\ \hline Invireen & [S] & 350 & \\ \hline Deprecing & IS & 1800 & \\ \hline \end{tabular} Insurance is paid on an annual basis, in November of each year. The company plans to purchase $17,200 in new equipment during May and \$ 42,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $18,200 each quarter, payable in the first month of the following quarter. The company's balance sheet as of March 31 is given below. \begin{tabular}{|c|c|c|} \hline \multicolumn{3}{|l|}{ ASSAIS } \\ \hline Cach & S & 6723 \\ \hline & & 585200 \\ \hline Inventory & & 111216 \\ \hline Prepalinsurence & & 25600 \\ \hline Property and eoulpment (oook veluenet of Ae,Dep) & & 1,120000 \\ \hline Total assets & 8 & 185920 \\ \hline \multicolumn{3}{|l|}{ UABIUTES AND STOCKHOLDERSIEOUIYY } \\ \hline Accounts peyeble & S & 107580 \\ \hline Dividends payable & & 18200 \\ \hline Common stock & & 15120000 \\ \hline Retained eamings & & \\ \hline Totinlabilies and stockholders equ. & & 1859200 \\ \hline \end{tabular} The company maintains a minimum cash balance of \$52,000. All borrowing is done at the beginning of a month; any repayments are made at the end of a month. The company has an agreement with a bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicily we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible (in increments of $1,000 ), while still retaining at least $52,000 in cash. QUESTION: Use the same current quarter's cost structure and earring price assumptions from the graph below. The company is considering paying the retail coordinator an incentive commission of $0.10 per pair of earnings. This will be on top of the salespeople's commission and there will be no change in fixed salaries. If this change is made, what will be the new break-even point in unit sales and dollar sales
