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Required information

Exercise $9-25($Static$)$ Cost Planning; Compensating Sales Staff $[$LO $9-3,9-5]$

$[$The following information applies to the questions displayed below.$]$

The Jurassic Classics has four employees on its sales team and uses a compensation that provides each person with a base salary of $$40,000$ per year and the opportunity to earn commission on sales. The current commission is $5\%$ of gross sales, and sales for the most recent period were $$2,500,0000.$ Management is considering making a change to the compensation system and wants to evaluate two possible alternatives: going to a strictly commission$-$based compensation system and going to purely salary$-$based compensation. The strictly commission$-$based method would eliminate the salary but raise the commission to $11\%$ of sales. If the purely salary$-$based approach is adopted, the salary for each person would rise to $$70,000$ and the commission would be eliminated.

Part $1($Static$)$

Required:

Compute the total compensation of the sales team for all three options at $$2,000,000,$$$2,500,000,$ and $$3,000,000$ of total sales.

What sales level would make management indifferent between the current compensation structure and the strictly commissionbased structure? What is the point of indifference between the current structure and the pure salary$-$based structure?

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

Required $1$

Compute the total compensation of the sales team for all three options at $$2,000,000,$$$2,500,000,$ and $$3,000,000$ of total sales.

$\backslash$table$[[$Sales$,\backslash$table$[[$Current$],[$method$]],\backslash$table$[[$Commission$],[$only$]],$Salary only$],[$$$3,2,000,000,,,],[$$$3,2,500,000,,,],[$$$3,000,000,,,,]]$

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