Business, 20.10.2021 14:00 lafuiciosa10
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, 2020, is as follows.
BONITA BEAUTY CORPORATION
Income Statement For the Year Ended December 31, 2020
Sales $79,700,000
Cost of goods sold
Variable $32,677,000
Fixed 8,500,000 41,177,000
Gross margin $38,523,000
Selling and marketing expenses
Commissions $14,346,000
Fixed costs 10,060,700 24,406,700
Operating income $14,116,300
The company is considering hiring its own sales staff to replace the network of agents. It will pay its salespeople a commission of 9% and incur additional fixed costs of $7,173,000. Under the current policy of using a network of sales agents, calculate the Bonita Beauty Corporation
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