"QUESTION: ANSWER:To answer all questions we need to first summarize the given data and furtherrequirements, in below tabular format:15% 20% OwnCommission Commission Sales ForceAmount % Amount % Amount %Sales $18,000,000 $18,000,000 $18,000,000Variable Expenses: Manufacturing $8,100,000 $8,100,000 $8,100,000Commissions (15%, 20%,7.5%) $2,700,000 $3,600,000 $1,350,000Total variable expenses $10,800,000 60.0% $11,700,000 65.0% $9,450,000 52.5%Contribution margin(CM) $7,200,000 40.0% $6,300,000 35.0% $8,550,000 47.5%Fixed expenses: Manufacturing overhead $2,390,000 $2,390,000 $2,390,000Marketing $170,000 $170,000 $2,770,000*Administrative $1,850,000 $1,850,000 $1,725,000**Interest $765,000 $765,000 $765,000Total Fixed expenses $5,175,000 $5,175,000 $7,650,000 Income before incometaxes $2,025,000 $1,125,000 $900,000Income taxes (20%) $405,000 $225,000 $180,000Net income $1,620,000 $900,000 $720,000* Existing fixed cost + fixed cost of setting own sales force = $170,000 + $2,600,000 =$2,770,000** Existing Administrative expenses - audit fees = $1,850,000 - $125,000 = $1,725,000(1) Breakeven point = Fixed cost / CM ratio(a) Commission remains 15% = $51,75,000 / 40% = $12,937,500(b) Commission changed to 20% = $51,75,000 / 35% = $14,785,712.29(c) Own sales force = $76,50,000 / 47.5% = $16,105,263.16(2) Profit is required to be maintained at budgeted level of $1,620,000, that means pre- tax profit = $2,025,000 [$1,620,000 / (1-20%)]. When 20% commission is paid fixed cost =$5,175,000 (given in above table). CM ratio = 35%.Target Sales = (Target Income before taxes + Fixed expenses) / CM Ratio= ($2,025,000 + $5,175,000) / 35%= $20,571,429(3) The volume of sales at which net income would be equal whether 20% commission ispaid or company employs own sales force plan, this is a level where volume of Saleswhere all costs (fixed + Variable) before income taxes under the two options are equal:Let Sales be xx*65% + $5,175,000 = x*52.5% + $7,650,000x = $19,800,000 (Sales level) (4) Degree of Operating Leverage = Contribution Margin / Income before taxes(a) Commission remains 15% = $7,200,000 / $2,025,000 = 3.56(b) Commission changed to 20% = $6,300,000 / $1,125,000 = 5.60(c) Own sales force = $8,550,000 / $900,000 = 9.50 "