Washabe, Inc. manufactures cosmetic products that are sold through an independent network of sales agents. The agents are paid a commission of 12.5% of sales (option A). The income statement for the year ending December 31, 2017, is as follow. $130,000 Washabe, INC. Income Statement Year Ending December 31, 2017 Sales Cost of goods sold Variable $58,500 Fixed 14,350 Gross margin Selling and marketing expenses Commissions $16.250 Fixed costs 17.100 Operating income 72,850 57,150 33,350 $ 23,800 The company is considering hiring its own sales staff to replace the network of agents. It will pay its salespeople a commission of 10% and incur additional fixed costs of $13,000. Required: (a) Under the current policy of using a network of sales agents, calculate Washabe, Inc.'s break-even point in sales dollars for the year 2017. (2.5 marks) (b) Calculate Wasabe Inc.'s break-even point in sales dollars for the year 2017 if it hires its own sales force (option B) to replace the network of agents. Based on the difference in break-even points between options A and B, provide an analysis about the retention (option A) or replacement option B) of the network of agents. Explain which one is preferable? (3.5 marks) (C) Calculate the target sales values in dollars that would generate an identical net income for the year ending December 31, 2017, regardless of whether Wasabe Inc. employs its own sales staff and pays them a 10% commission as well as incurring additional fixed costs of $13,000 (option B) or continues to use the independent network of agents (option A). In not more than 100 words, explain how you formulate the equation and state the assumption(s) that you have made to arrive at the answer. (6.5 marks) (d) Provide a recommendation to Wasabe Inc. about retention (option A) or replacement (option B) of the network of agents if the sales level in the year 2017 is forecast to be higher than the target sales value [what you calculated in (c) above]. In not more than 150 words, state the assumption(s) and justify your recommendation with a numerical example of your own. (5.5 marks)