The Jurassic Classics has four employees on its sales team and uses a compensation that provides each

person with a base salary of $$52,000$ per year and the opportunity to earn commission on sales. The

current commission is $5\%$ of gross sales, and sales for the most recent period were $$3,250,000.$

Management is considering making a change to the compensation system and wants to evaluate two

possible alternatives: going to a strictly commission$-$based compensation system and going to purely

salary$-$based compensation. The strictly commission$-$based method would eliminate the salary but raise

the commission to $11\%$ of sales. If the purely salary$-$based approach is adopted, the salary for each

person would rise to $$91,000$ and the commission would be eliminated.

Award: $2\mathrm{.}00$ points

Required:

Compute the total compensation of the sales team for all three options at $$2,600,000,$$$3,250,000,$

and $$3,600,000$ of total sales.

What sales level would make management indifferent between the current compensation structure

and the strictly commission$-$based structure? What is the point of indifference between the current

structure and the pure salary$-$based structure?