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ThomasT produces and sells a vacuums: Per unit % Selling price 180 100% Variable expense 54 30% Contribution margin 126 70% Fixed expenses are $505,000

ThomasT produces and sells a vacuums:

Per unit %

Selling price 180 100%

Variable expense 54 30%

Contribution margin 126 70% Fixed expenses are $505,000 per month. The company is currently selling 5,000 units per month. Tommy, the marking manager would like to introduce sales commissions as an incentive for his sales staff. Tommy has proposed a commission of $16 per unit. In exchange, the sales staff would accept an overall decrease in their salaries of $65,000 per month. Sales staff salaries expenses are considered fixed expenses. Tommy predicts that introducing this sales incentive would increase monthly sales by 100 units. What should be the overall effect on the company's monthly net operating income of this change?

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