Reference no: EM132739039
The following data relate to Homer Company which sells a single product:
Unit selling price P 20.00
Purchase cost per unit 11.00
Sales commission, 10% of selling price 2.00
Monthly fixed costs P80,000
The firm's salespersons would like to change their compensation from a 10 percent commission to a 5 percent commission plus P20,000 per month in salary. They now receive only commission.
Problem 1: The change in compensation plan should change the monthly breakeven point by
A. 1,071 Increase C. 1,538 Increase
B. 1,071 Decrease D. 1,538 Decrease
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