A single product is produced and sold by Hawkings Corporation. Data concerning that product appear below:rn

 

Fixed expenses are $147,000 per month. The company is currently selling 2,000 units per month. The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $13 per unit. In exchange, the sales staff would accept a decrease in their salaries of $22,000 per month. (This is the company's savings for the entire sales staff.) The marketing manager predicts that introducing this sales incentive would increase monthly sales by 400 units. What should be the overall effect on the company's monthly net operating income of this change?rn
Select one:
a). increase of $16,800
b). increase of $226,000
c). increase of $30,000
d). decrease of $14,000

Transcribed Image Text:

Per Unit $140 42 $ 98 Percent of Sales 100% Selling price.. Variable expenses Contribution margin... 30% 70% Per Unit $140 42 $ 98 Percent of Sales 100% Selling price.. Variable expenses Contribution margin... 30% 70%

Answer rating: 100% (QA)

Incremental Sale 56000 400 Units 140 Less Variable cost 42 per u... View the full answer