Manufacturers representatives to an internal sales force

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A manufacturer is considering a switch from manufacturer’s representatives to an internal sales force. The following cost estimates are available. Manufacturer’s reps are paid 8.4% commission and incur $590,000 in fixed costs; while an internal sales force has fixed costs projected at $1,800,000 and would receive 2.7% commission. Assume that sales revenue is double the breakeven volume or the point at which the manufacturer would be indifference between reps and an internal sales force. At this volume, how much would the manufacturer save, assuming the company had switched to an internal sales force? Report your answer in dollars.

Reference no: EM13759367

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