Glade, Incorporated, is trying to decide whether to increase the commission$-$based pay of its salespeople. Currently, each of its five salespeople earns a $10\%$ commission on the units they sell for $$100$ each, plus a fixed salary of $$41,600$ per person. Glade hopes that by increasing commissions to $15\%$ and decreasing each salesperson$$s salary to $$21,800,$ sales will increase because salespeople will be more motivated. Currently, sales are $21,000$ units. Glade$$s other fixed costs, not including the salespeople$$s salaries, total $$586,000.$ Glade$$s other variable costs, not including commissions, total $$17$ per unit.

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At what sales level would Glade be indifferent between the lower$-$commission plan and the higher$-$commission plan?

Point of Indifference

unitsGlade, Incorporated, is trying to decide whether to increase the commission$-$based pay of its salespeople. Currently, each of its five

salespeople earns a $10\%$ commission on the units they sell for $$100$ each, plus a fixed salary of $$41,600$ per person. Glade hopes that

by increasing commissions to $15\%$ and decreasing each salesperson's salary to $$21,800,$ sales will increase because salespeoplill

be more motivated. Currently, sales are $21,000$ units. Glade's other fixed costs, not including the salespeople's salaries, total

$$586,000.$ Glade's other variable costs, not including commissions, total $$17$ per unit.

Required:

a$.$ What is the current profit?

b$.$ What is the current break$-$even point in units?

c$.$ What would the break$-$even point in units be if commissions are increased and salaries decreased?

d$.$ If sales increase by $7,000$ units, what will profit be under the new plan?

e$.$ At what sales level would Glade be indifferent between the lower$-$commission plan and the higher$-$commission plan?

Complete this question by entering your answers in the tabs below.

What is the current profit?