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trying to understand what exactly is this question asking me and how to work out this problem. Q: Determine the volume of sales at which

trying to understand what exactly is this question asking me and how to work out this problem.

Q: Determine the volume of sales at which net operating income would be equal regardless of whether Morocco Corp. sells through agents (at 20% commission rate) or employs its own sales force. These are my numbers:

Commission increases to 20%

sales $30,000,000

Cost of good sold

less: variable cost $17,800,000

commissions (30,000,000*20%) 6,000,000

Contribution Marign $6,200,000 $23,800,000 Margin Ratio 20.67%

Cost of good sold $2,400,000

Less: Fixed Adv. Exp. $800,000

Fixed Admin. Exp $3,200,000 $6,400,000

Net profit $(200,000)

Company's own sales force

sales $30,000,000

Cost of good sold

less: variable cost $17,800,000

commissions (30,000,000*10%) $3,000,000

Contribution Margin $9,200,000 $20,800,000 Margin Ratio 30.67%

Cost of good sold $2,400,000

Less: Fixed Adv. Exp.($800,000+ $500,000)$1,300,000

Fixed Admin. Exp $4,600,000 $8,300,000

Net profit $900,000

I think I need to use the formula for Operating Profit, but not sure how to proceed?

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