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3 ok ht nces Glade, Incorporated, is trying to decide whether to increase the commission-based pay of its salespeople. Currently, each of its five salespeople earns a 7% commission on the units they sell for $100 each, plus a fixed salary of $40,900 per person. Glade hopes that by increasing commissions to 12% and decreasing each salesperson's salary to $21,000, sales will increase because salespeople will be more motivated. Currently, sales are 22,000 units. Glade's other fixed costs, not including the salespeople's salaries, total $593,000. 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 12,000 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. Required A Required B What is the current profit? Current Profit Required C Required D Required E

3 ok ht nces Glade, Incorporated, is trying to decide whether to increase the commission-based pay of its salespeople. Currently, each of its five salespeople earns a 7% commission on the units they sell for $100 each, plus a fixed salary of $40,900 per person. Glade hopes that by increasing commissions to 12% and decreasing each salesperson's salary to $21,000, sales will increase because salespeople will be more motivated. Currently, sales are 22,000 units. Glade's other fixed costs, not including the salespeople's salaries, total $593,000. 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 12,000 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. Required A Required B What is the current profit? Current Profit Required C Required D Required E

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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t nces Glade, Incorporated, is trying to decide whether to increase the commission-based pay of its salespeople. Currently, each of its five salespeople earns a 7% commission on the units they sell for $100 each, plus a fixed salary of $40,900 per person. Glade hopes that by increasing commissions to 12% and decreasing each salesperson's salary to $21,000, sales will increase because salespeople will be more motivated. Currently, sales are 22,000 units. Glade's other fixed costs, not including the salespeople's salaries, total $593,000. 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 12,000 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. Required A Required B What is the current profit? Current Profit Required C Required D Required E
Transcribed Image Text:t nces Glade, Incorporated, is trying to decide whether to increase the commission-based pay of its salespeople. Currently, each of its five salespeople earns a 7% commission on the units they sell for $100 each, plus a fixed salary of $40,900 per person. Glade hopes that by increasing commissions to 12% and decreasing each salesperson's salary to $21,000, sales will increase because salespeople will be more motivated. Currently, sales are 22,000 units. Glade's other fixed costs, not including the salespeople's salaries, total $593,000. 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 12,000 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. Required A Required B What is the current profit? Current Profit Required C Required D Required E
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