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Under the current policy of using a network of sales agents, calculate the Bonita Beauty Corporation's break-even point in sales dollars for the year 2017.
Under the current policy of using a network of sales agents, calculate the Bonita Beauty Corporation's break-even point in sales dollars for the year 2017. (Round intermediate calculations to 2 decimal places e.g. 10.25 and final answers to 0 decimal places, e.g. 2,510.)
Bonita Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission of 18% of sales. The income statement for the year ending December 31, 2017, is as follows. BONITA BEAUTY CORPORATION Income Statement For the Year Ended December 31, 2017 Sales $74,800,000 Cost of goods sold Variable $31,416,000 Fixed 8,970,000 40,386,000 Gross margin $34,414,000 Selling and marketing expenses Commissions $13,464,000 Fixed costs 10,790,000 24,254,000 Operating income $10,160,000 The company is considering hiring its own sales staff to replace the network of agents. It will pay its salespeople a commission of 7% and incur additional fixed costs of $8,228,000Step by Step Solution
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