Calculate marston contribution margin percentage

Assignment Help Accounting Basics
Reference no: EM131787347

Problem - Choosing between compensation plans, operating leverage (CMA, adapted) Marston Corporation manufactures pharmaceutical products that are sold through a network of external sales agents. The agents are paid a commission of 18% of revenues. Marston is considering replacing the sales agents with its own salespeople, who would be paid a commission of 10% of revenues and total salaries of $2,080,000. The income statement for the year ending December 31, 2008, under the two scenarios is shown here.

2007_figure.png

1. Calculate Marston's 2008 contribution margin percentage, breakeven revenues, and degree of operating leverage under the two scenarios.

2. Describe the advantages and disadvantages of each type of sales alternative.

3. In 2009, Marston uses its own salespeople, who demand a 15% commission. If all other cost behavior patterns are unchanged, how much revenue must the salespeople generate in order to earn the same operating income as in2008?

Reference no: EM131787347

Questions Cloud

Single-name cds on a corporate entity : How does one approximate the CDS spread for a single-name CDS on a corporate entity?
Define cash expenditures related to fixed costs : Boise Timber Co. computes its break-even point strictly on the basis of cash expenditures related to fixed costs. Its total fixed costs are $6,000,000.
Discuss what ethical issues are involved : Jennifer VanPelt is the assistant chief accountant at BIT Company, a manufacturer of computer chips and cellular phones
Par asset swap market contain : In pricing a single-name CDS, what information does the par asset swap market contain?
Calculate marston contribution margin percentage : Calculate Marston's 2008 contribution margin percentage, breakeven revenues, and degree of operating leverage under the two scenarios
Compare the mean in a sentence or two : statistician asked a group of 60 employees how many hours they have worked overtime during the last two weeks
Credit default swap market reporting : The following is an excerpt from "MCDX Municipal CDS index on the rise," Credit Default Swap Market Reporting, July 1, 2010
What is the probability that a firm selected : What is the probability that a firm selected at random is a SSSBE unit - Calculate the average of the first performance measure
Compare design and layout of an android phone application : Compare and contrast the design and layout of an Android phone application with that of a traditional desktop application.

Reviews

Write a Review

Accounting Basics Questions & Answers

  Munoz corporation uses activity-based costing to determine

munoz corporation uses activity-based costing to determine product costs for external financial reports. at the

  Adjusting entries for the month

The office equipment has a 5-year life with no salvage value. It is being depreciated at $295 per month for 60 months. Invoices representing $1,005 of services performed during the month have not been recorded as of June 30. (a) Prepare the adjusting..

  Prepare the journal entry to record the sale

On February 9 Ernst gave Gonzalez Co. a 10% promissory note in settlement of the accounts receivable. Prepare the journal entry to record the sale

  Prepare kingdom amortization schedule

The normal selling price of the jousting equipment is $325000 and the cost of the asset to Kingdom Leasing Inc. was $250000.

  Physical count of office supplies

On December 31, 2008, a physical count of office supplies revealed that there was $700 worth on hand. As a result of this information, the bookkeeper will have to

  How can your role as an accountant ensure that the

you know that both internal and external users have not only the short-term success but also the long-term success of

  Prepare entries for moberly to record rent expense

On January 1, 2011, Liberty decides to sublease the space to Moberly Co. for the remaining five years of the lease-Moberly pays $30,000 to Liberty.

  Average variable cost exceeds price at all output levels

Total cost exceeds total revenue at all output levels.  Average variable cost exceeds price at all output levels.

  What is net cash provided by operating activities

Which of the following would not be a component of cash flows from investing activities?

  Compute the amount of goodwill recognized

Assume that fair value of the Conchita Division is $1,600,000 instead of $1,850,000. Determine the impairment loss, if any, to be recorded on December 31, 2010.

  Record the sale

Abbott Landscaping purchased a tractor at a cost of $36,000 and sold it three years later for $18,000. Record the sale

  What deceit do you believe the creditors are claiming

Common Law Liability Exposure. An accounting firm was engaged to examine the financial statements of Martin Manufacturing Corporation for the year ending.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd