Question

Kindle, Inc. manufactures cosmetic products that are sold through a network of sales agents. The agents...

Kindle, Inc. manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission of 12.5% of sales. The income statement for the year ending December 31, 2019, is as follow.
KINDLE, INC.
Income Statement
Year Ending December 31, 2019
Sales $130,000
Cost of goods sold
Variable $58,500
Fixed 14,350 72,850
Gross margin 57,150
Selling and marketing expenses
Commissions $16,250
Fixed costs 17,100 33,350
Operating income $23,800

The company is considering hiring its own sales staff to replace the network of agents. It will pay its salespeople a commission of 10% and incur additional fixed costs of $13,000.
Under the current policy of using a network of sales agents, calculate Kindle, Inc.'s break-even point in sales dollars for the year 2019. (Round contribution margin answer to 3 decimal places, e.g. 52.143. Round final answer to 0 decimal places, e.g. 1525.)
Break-even point $
Calculate the company's break-even point in sales dollars for the year 2019 if it hires its own sales force to replace the network of agents. (Round contribution margin answer to 2 decimal places, e.g. 52.13. Round final answer to 0 decimal places, e.g. 1525.)
Break-even point $

  

Calculate the degree of operating leverage at sales of $13,000 if (1) Kindle, Inc. uses sales agents, and (2) Kindle, Inc. employs its own sales staff. (Round answers to 2 decimal places, e.g. 15.25.)
Operating leverage
Kindle, Inc. uses sales agents

  

Kindle, Inc. employs its own sales staff

Homework Answers

Answer #1

I HOPE IT USEFUL TO YOU IF YOU HAVE ANY DOUBT PLZ COMMENT PLEASE GIVE ME UP-THUMB. THANKS....

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Kindle, Inc. manufactures cosmetic products that are sold through a network of sales agents. The agents...
Kindle, Inc. manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission of 12.5% of sales. The income statement for the year ending December 31, 2019, is as follow. KINDLE, INC. Income Statement Year Ending December 31, 2019 Sales $130,000 Cost of goods sold Variable $58,500 Fixed 14,350 72,850 Gross margin 57,150 Selling and marketing expenses Commissions $16,250 Fixed costs 17,100 33,350 Operating income $23,800 The company is considering hiring its own...
Bonita Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The...
Bonita Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission of 21% 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 $79,000,000 Cost of goods sold     Variable $38,710,000     Fixed 8,750,000 47,460,000     Gross margin $31,540,000 Selling and marketing expenses     Commissions $16,590,000     Fixed costs 10,610,000 27,200,000     Operating income $4,340,000 The company is...
Bonita Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The...
Bonita Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission of 20% 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 $77,300,000 Cost of goods sold     Variable $37,877,000     Fixed 8,760,000 46,637,000     Gross margin $30,663,000 Selling and marketing expenses     Commissions $15,460,000     Fixed costs 10,000,000 25,460,000     Operating income $5,203,000 The company is...
Bonita Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The...
Bonita Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission of 21% 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 $70,800,000 Cost of goods sold     Variable $33,276,000     Fixed 8,840,000 42,116,000     Gross margin $28,684,000 Selling and marketing expenses     Commissions $14,868,000     Fixed costs 10,570,000 25,438,000     Operating income $3,246,000 The company is...
Bonita Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The...
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, 2020, is as follows. BONITA BEAUTY CORPORATION Income Statement For the Year Ended December 31, 2020 Sales $70,700,000 Cost of goods sold     Variable $28,280,000     Fixed 8,810,000 37,090,000     Gross margin $33,610,000 Selling and marketing expenses     Commissions $12,726,000     Fixed costs 10,102,600 22,828,600     Operating income $10,781,400 The company is...
Bonita Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The...
Bonita Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission of 20% of sales. The income statement for the year ending December 31, 2020, is as follows. BONITA BEAUTY CORPORATION Income Statement For the Year Ended December 31, 2020 Sales $76,400,000 Cost of goods sold     Variable $32,852,000     Fixed 8,720,000 41,572,000     Gross margin $34,828,000 Selling and marketing expenses     Commissions $15,280,000     Fixed costs 10,360,900 25,640,900     Operating income $9,187,100 The company is...
Marston Corporation manufactures disposable thermometers that are sold to hospitals through a network of independent sales...
Marston Corporation manufactures disposable thermometers that are sold to hospitals through a network of independent sales agents located in the United States and Canada. These sales agents sell a variety of products to hospitals in addition to Marston's disposable thermometer. The sales agents are currently paid an 19% commission on sales, and this commission rate was used when Marston's management prepared the following budgeted absorption income statement for the upcoming year. Marston Corporation Budgeted Income Statement   Sales $ 33,000,000   Cost...
Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales...
Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own; rather, it relies completely on independent sales agents to market its products. These agents are paid a sales commission of 19% for all items sold. Barbara Cheney, Pittman’s controller, has just prepared the company’s budgeted income statement for next year. The statement follows: Pittman Company Budgeted Income Statement For the Year Ended December 31 Sales $ 17,200,000 Manufacturing expenses: Variable...
Waterways Continuing Problem 06 a (Part 3) The section of Waterways that produces controllers for the...
Waterways Continuing Problem 06 a (Part 3) The section of Waterways that produces controllers for the company provided the following information. Sales in units for month of February 4,100 Variable manufacturing cost per unit $10.00 Sales price per unit $46.00 Fixed manufacturing overhead cost (per month for controllers) $79,000 Variable selling and administrative expenses per unit $3.80 Fixed selling and administrative expenses (per month for controllers) $14,310 Using this information for the controllers, determine the contribution margin ratio, the degree...
Tanek Corp.’s sales slumped badly in 2017. For the first time in its history, it operated...
Tanek Corp.’s sales slumped badly in 2017. For the first time in its history, it operated at a loss. The company’s income statement showed the following results from selling 515,500 units of product: sales $2,577,500, total costs and expenses $2,680,600, and net loss $103,100. Costs and expenses consisted of the amounts shown below. Total Variable Fixed Cost of goods sold $2,206,340 $1,639,290 $567,050 Selling expenses 257,750 94,852 162,898 Administrative expenses 216,510 70,108 146,402 $2,680,600 $1,804,250 $876,350 Management is considering the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT