Data concerning Ulwelling Corporation's single product appear below: Per Unit Percent of Sales Selling price $ 160 100 % Variable expenses 48 30 % Contribution margin $ 112 70 % Fixed expenses are...

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Accounting

Data concerning Ulwelling Corporation's single product appearbelow:
Per Unit Percent of Sales
Selling price $ 160 100 %
Variable expenses 48 30 %
Contribution margin $ 112 70 %
Fixed expenses are $1,054,000 per month. The company iscurrently selling 9,800 units per month.
The marketing manager would like to introduce sales commissionsas an incentive for the sales staff. The marketing manager hasproposed a commission of $8 per unit. In exchange, the sales staffwould accept an overall decrease in their salaries of $100,000 permonth. The marketing manager predicts that introducing this salesincentive would increase monthly sales by 500 units.
Required:
What should be the overall effect on the company's monthly netoperating income of this change? (Negative amount should beindicated by a minus sign.)

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Calculation of net operating income Sales variable costs Contribution fixed costs net operating income Net operating income of present system Sales 9800 units 160 1568000 variable cost 9800 units 48 470400 Contribution 9800 units 112 1097600 fixed cost 1054000 Net See Answer

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	Per Unit		Percent of Sales
Selling price	$	160		100	%
Variable expenses		48		30	%
Contribution margin	$	112		70	%