Question: Data concerning Beta single product appear below: Selling price Variable expenses Contribution margin Per Unit Percent of Sales $800 100% 200 25% S 600 75%

Data concerning Beta single product appear below: Selling price Variable expenses Contribution margin Per Unit Percent of Sales $800 100% 200 25% S 600 75% The company is currently selling 300 units per month. The marketing manager would like to introduce sales commissions as an incentive for the sales staff. Fixed expenses are $ 80,000 per month. The marketing manager has proposed a commission of $20 per unit. In exchange, monthly salaries will decreases by $9,600 per month. The marketing manager predicts that introducing this sales incentive would increase monthly sales by 80 units. Instructions: What should be the overall effect on the company's monthly net operating income of this change? Use a comparative table for the two levels of production 300 and 380 units. (each level 2 marks) Solution

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