Zahner Corporation manufactures housewares products that are sold through a network of external sales agents. The agents are paid a commission of 20% of revenues. Zahner is considering replacing the sales agents with its own salespeople, who would be paid a commission of 10% of revenues and total salaries of $3,520,000. The income statement for the year ending December 31, 2017, under the two scenarios is shown here.

93 Home Insert Page Layout Formulas Data Review View A B C D E H Zahner Corporation 2 Income Statement 3 For the Year Ended December, 2017 4 Using Sales Agents Using Own Sales Force 5 Revenues $35,200,000 $35,200,000 6 Cost of goods sold 7 Variable $13,375,000 $13,375,000 8 Fixed 4, 125,000 17,500,000 4, 125,000 17,500,000 9 Gross margin 17,700,000 17,700,000 10 Marketing costs 11 Commissions $ 7,040,000 $ 3,520,000 12 Fixed costs 4,025,000 11,065,000 7,545,000 11,065,000 13 Operating income $ 6.635,000 $ 6.635,000