(CMA, adapted) Zahner Corporation manufactures housewares products that are sold through a network of external sales agents. The agents are paid a commission of 20% of revenues. Zahner is considering replacing the sales agents with its own salespeople, who would be paid a commission of 10% of revenues and total salaries of $3,520,000. The income statement for the year ending December 31, 2017, under the two scenarios is shown here. Home Insert Page Layout Formulas Data Review View Zahner Corporation Income Statement For the Year Ended December, 2017 Using Sales Agents $35,200,000 3 Using Own Sales Force $35,200,000 5 Revenues 6 Cost of goods sold Variable $13,375,000 4,125,000 17,500,000 17,700,000 $13,375,000 4,125,000 17,500,000 Fixed 9 Gross margin 10 Marketing costs Commissions 17,700,000 $ 7,040,000 4,025.000 11,065,000 S 6,635.000 $ 3,520,000 7,545,000 11 11,065,000 S 6,635,000 Fixed costs 12 13 Operating income

(CMA, adapted) Zahner Corporation manufactures housewares products that are sold through a network of external sales agents. The agents are paid a commission of 20% of revenues. Zahner is considering replacing the sales agents with its own salespeople, who would be paid a commission of 10% of revenues and total salaries of $3,520,000. The income statement for the year ending December 31, 2017, under the two scenarios is shown here. Home Insert Page Layout Formulas Data Review View Zahner Corporation Income Statement For the Year Ended December, 2017 Using Sales Agents $35,200,000 3 Using Own Sales Force $35,200,000 5 Revenues 6 Cost of goods sold Variable $13,375,000 4,125,000 17,500,000 17,700,000 $13,375,000 4,125,000 17,500,000 Fixed 9 Gross margin 10 Marketing costs Commissions 17,700,000 $ 7,040,000 4,025.000 11,065,000 S 6,635.000 $ 3,520,000 7,545,000 11 11,065,000 S 6,635,000 Fixed costs 12 13 Operating income

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter5: Introduction To Business Expenses

Section: Chapter Questions

Problem 63P

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Choosing between compensation plans, operating leverage. (CMA, adapted) ZahnerCorporation manufactures housewares products that are sold through a network of external salesagents. The agents are paid a commission of 20% of revenues. Zahner is considering replacing thesales agents with its own salespeople, who would be paid a commission of 10% of revenues and totalsalaries of $3,520,000. The income statement for the year ending December 31, 2017, under the twoscenarios is shown here.?????????????????? ? ? ? ?Revenues $35,200,000 $35,200,000Cost of goods soldVariable $13,375,000 $13,375,000Fixed 4,125,000 17,500,000 4,125,000 17,500,000Gross margin 17,700,000 17,700,000Marketing costsCommissions $ 7,040,000 $ 3,520,000Fixed costs 4,025,000 11,065,000 7,545,000 11,065,000Operating income $ 6,635,000 $ 6,635,000Zahner CorporationUsing Sales Agents Using Own Sales ForceFor the Year Ended December, 2017Income Statement1. Calculate Zahner’s 2017 contribution margin percentage, breakeven…
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