Question
Timonen Corporation produces and sells a single product. Data concerning the product appear below: Per Unit Percent of Sales Selling price $ 150 100% Variable
Timonen Corporation produces and sells a single product. Data concerning the product appear below: Per Unit Percent of Sales Selling price $ 150 100% Variable expenses 33 22% Contribution margin $ 117 78% Fixed expenses total $1,056,000 per month. Timonen is currently selling 9,900 units per month. Timonen's sales manager would like to begin offering sales commissions as an incentive for the sales staff. The sales manager believes a commission of $10 per unit will work well. In exchange for receiving the commission on each sale, the sales staff would accept an overall decrease in their salaries of $102,000 per month. The sales manager predicts that introducing this sales incentive would increase monthly sales by 310 units. Required: Calculate the overall effect on Timonen's monthly net operating income if this change is made. (Negative amounts/decreases should be indicated by a minus sign. Omit the "$" sign in your response.) Change in net operating income $
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