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Discuss it will pay its salespeople a commission

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Reference no: EM131754259

Bonita Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission of 18% of sales. The income statement for the year ending December 31, 2017, is as follows.

BONITA BEAUTY CORPORATION Income Statement For the Year Ended December 31, 2017

Sales $79,300,000
Cost of goods sold
    Variable $31,720,000
    Fixed 8,540,000 40,260,000
    Gross margin $39,040,000
Selling and marketing expenses
    Commissions $14,274,000
    Fixed costs 10,750,000 25,024,000
    Operating income $14,016,000

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 $6,344,000.

Reference no: EM131754259

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