Waterway 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, 2020, is as follows.

WATERWAY BEAUTY CORPORATION Income Statement For the Year Ended December 31, 2020
Sales				$74,800,000
Cost of goods sold
Variable		$32,164,000
Fixed		8,970,000		41,134,000
Gross margin				$33,666,000
Selling and marketing expenses
Commissions		$13,464,000
Fixed costs		10,791,300		24,255,300
Operating income				$9,410,700

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 $8,228,000.

(61) X Your answer is incorrect. Calculate the degree of operating leverage at sales of $74,800,000 if (1) Waterway Beauty uses sales agents, and (2) Waterway Beauty employs its own sales staff. (Round answers to 2 decimal places, e.g. 1.25.) Degree of operating leverage (1) Waterway Beauty uses sales agents 4.30 (2) 5.65 Waterway Beauty employs its own sales staff e Textbook and Media Save for Later Attempts: 1 of 15 used Submit Answer (61) X Your answer is incorrect. Calculate the degree of operating leverage at sales of $74,800,000 if (1) Waterway Beauty uses sales agents, and (2) Waterway Beauty employs its own sales staff. (Round answers to 2 decimal places, e.g. 1.25.) Degree of operating leverage (1) Waterway Beauty uses sales agents 4.30 (2) 5.65 Waterway Beauty employs its own sales staff e Textbook and Media Save for Later Attempts: 1 of 15 used Submit