Sandhill Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission of 21% of sales. The income statement for the year ending December 31, 2025, is as follows. SANDHILL BEAUTY CORPORATION Income Statement For the Year Ended December 31, 2025 Sales Cost of goods sold Variable Fixed Gross profit Selling and marketing expenses Commissions Fixed costs Operating income $29,920,000 8,590,000 $15,708,000 10,890,500 $74,800,000 38,510,000 $36,290,000 26,598,500 $9,691.500 The company is considering hiring its own sales staff to replace the network of agents. It will pay its salespeople a commission of 10% and incur additional fixed costs of $8,228,000.
Sandhill Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission of 21% of sales. The income statement for the year ending December 31, 2025, is as follows. SANDHILL BEAUTY CORPORATION Income Statement For the Year Ended December 31, 2025 Sales Cost of goods sold Variable Fixed Gross profit Selling and marketing expenses Commissions Fixed costs Operating income $29,920,000 8,590,000 $15,708,000 10,890,500 $74,800,000 38,510,000 $36,290,000 26,598,500 $9,691.500 The company is considering hiring its own sales staff to replace the network of agents. It will pay its salespeople a commission of 10% and incur additional fixed costs of $8,228,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Sandhill Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a
commission of 21% of sales. The income statement for the year ending December 31, 2025, is as follows.
SANDHILL BEAUTY CORPORATION
Income Statement
For the Year Ended December 31, 2025
Sales
Cost of goods sold
Variable
Fixed
Gross profit
Selling and marketing expenses
Commissions
Fixed costs
Operating income
(a)
$29,920,000
8,590,000
Break-even point
$15,708,000
$
10,890,500
$74,800,000
The company is considering hiring its own sales staff to replace the network of agents. It will pay its salespeople a commission of 10%
and Incur additional fixed costs of $8,228,000.
38,510,000
$36,290,000
26,598,500
$9,691.500
Under the current policy of using a network of sales agents, calculate the Sandhill Beauty Corporation's break-even point in sales.
dollars for the year 2025.
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