Solution:
15% commission | 20% commission | own sales force | |
Sales | 16500000 | 16500000 | 16500000 |
Variable expenses: | |||
Manufacturing | 7425000 | 7425000 | 7425000 |
Commission | 2475000 | 3300000 | 1237500 |
Total variable expenses | 9900000 | 10725000 | 8662500 |
Contribution margin | 6600000 | 5775000 | 7837500 |
Variable expenses ratio | 60.00% | 65.00% | 52.50% |
Contribution margin ratio | 40.000% | 35.000% | 47.500% |
Fixed expenses: | |||
Manufacturing overhead | 2310000 | 2310000 | 2310000 |
Marketing | 115500 | 115500 | 2590500 |
Administrative | 1820000 | 1820000 | 1744100 |
Interest | 577500 | 577500 | 577500 |
Total fixed expenses | 4823000 | 4823000 | 7222100 |
Income before income taxes | 1777000 | 952000 | 615400 |
Income taxes(30%) | 533100 | 285600 | 184620 |
Net income | 1243900 | 666400 | 430780 |
Break Even Point in dollars (Total Fixed Expenses/Controbution margin ratio) | 12057500 | 13780000 | 15204421 |
Solution 2: | |||
Income before tax as per income statement | 1777000 | ||
Total Fixed Expenses (when 20% commission) | 4823000 | ||
Total | 6600000 | ||
/ Contribution margin ratio (When 20% commission) | 35.000% | ||
Sales required to generate target profit | 18857143 | ||
Solution 3: | |||
Let Sales Volume be "X" | |||
Total Cost when commission 20% = Total Cost for Own sales Force | |||
0.6500*X +4823000 = 0.5250*X +7222100 | |||
0.125*X = 2399100 | |||
X = 2399100/0.125 | |||
X = 19192800 | |||
Hence, Sales volume required is $19,192,800. | |||
Solution 4: | |||
15% commission | 20% commission | own sales force | |
Contribution margin | 6600000 | 5775000 | 7837500 |
Income before taxes | 1777000 | 952000 | 615400 |
Degree of Operating Leverage (Contribution margin/Income before taxes) | 3.71 | 6.07 | 12.74 |
please slove all questions, thank you! Saved Help Sau Case 5-33 Cost Structure; Break-Even and Target...
Check my work Case 5-33 Cost Structure; Break-Even and Target Profit Analysis (L05-4, LOS-5, LO5-6) Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own rather, it relies completely on independent sales agents to market its products. These agents are paid a sales commission of 15% for al items sold. Barbara Cheney, Pittman's controller, has just prepared the company's budgeted Income statement for next year as follows: Pittman Company Budgeted...
Case 5-33 Cost Structure; Break-Even and Target Profit Analysis (LO5-4, LO5-5, LO5-6) Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own rather, it relies completely on independent sales agents to market its products. These agents are paid a sales commission of 15% for all items sold. Barbara Cheney, Pittman's controller, has just prepared the company's budgeted income statement for next year as follows: $26,000,000 15, 340,000 10,660,000 Pittman Company...
Case 5-33 Cost Structure; Break-Even and Target Profit Analysis [LO5-4, LO5-5, LO5-6] Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own; rather, it relies completely on independent sales agents to market its products. These agents are paid a sales commission of 15% for all items sold. Barbara Cheney, Pittman’s controller, has just prepared the company’s budgeted income statement for next year as follows: Pittman Company Budgeted Income Statement For...
Case 5-33 Cost Structure; Break-Even and Target Profit Analysis [LO5-4, LO5-5, LO5-6] Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own; rather, it relies completely on independent sales agents to market its products. These agents are paid a sales commission of 15% for all items sold. Barbara Cheney, Pittman’s controller, has just prepared the company’s budgeted income statement for next year as follows: Pittman Company Budgeted Income Statement For...
Check Case 5-33 Cost Structure; Break-Even and Target Profit Analysis (LO5-4, LO5-5, LO5-6] Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own; rather, it relies completely on independent sales agents to market its products. These agents are paid a sales commission of 15% for all items sold. Barbara Cheney, Pittman's controller, has just prepared the company's budgeted income statement for next year as follows: $21,000,000 12,390,000 8,610,000 Pittman Company...
i need help with 1,2,3, and 4. can you please show me how you arrived at the answers. thanks so much. Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own rather, it relies completely on independent sales agents to market its products. These agents are paid a sales commission of 15% for all items sold Barbara Cheney, Pittman's controller, has just prepared the company's budgeted income statement for next...
CASE 5–33 Cost Structure; Break-Even and Target Profit Analysis LO5–4, LO5–5, LO5–6 Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own; rather, it relies completely on independent sales agents to market its products. These agents are paid a sales commission of 15% for all items sold. Barbara Cheney, Pittman’s controller, has just prepared the company’s budgeted income statement for next year as follows: Pittman Company Budgeted Income Statement For...
Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own: rather, it relies completely on independent sales agents to market its products. These agents are paid a sales commission of 15% for all items sold "Pull all of these numbers together and we'll show them to the executive committee tomorrow," said Karl. With the approval of the committee, we can move on the matter immediately Barbara Cheney, Pittman's controller, has...
question 9 Saved $26,000,000 that we would avold on agents' commissions The breakdown of the $3,900,000 cost follows: Salaries: Sales manager Salespersons Travel and entertainment Advertising Total $ 162,500 975,000 650,000 2.112,500 $3,900,000 "Super" replied Karl. "And I noticed that the $3,900,000 equals what we're paying the agents under the old 15% commission rate." "It's even better than that," explained Barbara. "We can actually save $119,600 a year because that's what we're paying our auditors to check out the agents'...
PLEASE SHOW WORK OF DERIVED ANSWERS. THANK YOU. Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own; rather, it relies completely on independent sales agents to market its products. These agents are paid a sales commission of 15% for all items sold. Barbara Cheney, Pittman's controller, has just prepared the company's budgeted income statement for next year as follows: $18,500,000 10,915,000 7,585,000 Pittman Company Budgeted Income Statement For the...