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

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