Your wholesale auto parts company is considering expanding its territory to Illinois. To do so, you would need to hire sales reps to cover the new territory and are considering how many reps are optimal for your company. If the margin (sales revenue minus COGS divided by sales) is 30%, and sales reps cost $9,000 per month (including salary, benefits, and travel expenses), how many sales reps should you employ? Based on that level of sales reps, how much incremental (monthly) profit will you generate by selling in Illinois?

Number of Sales Reps Total monthly sales revenue in Illinois COGS Contribution Sales Rep Cost Net Benefits Marginal Net Benefits Marginal Cost Marginal Net Benefit 0 - 1 55,000 2 97,000 3 139,000 4 168,000 5 192,000 6 214,000 7 230,000 8 246,000 9 260,000 10 270,000