Data Concerning Bazin Corporation's Single Product Appear Below: Fixed

question 79

Multiple Choice

Data concerning Bazin Corporation's single product appear below: Fixed expenses are $384,000 per month. The company is currently selling 6,000 units per month. The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $9 per unit. In exchange, the sales staff would accept a decrease in their salaries of $46,000 per month. (This is the company's savings for the entire sales staff.) The marketing manager predicts that introducing this sales incentive would increase monthly sales by 500 units. What should be the overall effect on the company's monthly net operating income of this change?

• A) increase of $27,500
• B) decrease of $64,500
• C) increase of $41,500
• D) increase of $507,500

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Definitions:

Investment Center Managers

Executives responsible for a business unit or division's operations and financial results, including revenue, expenses, and invested capital.

Performance Measures

Metrics used to assess and track the efficiency, effectiveness, and productivity of an organization or its employees.

Income and Capital

Refers to the two primary ways wealth is generated: income through earnings like wages and investments, and capital through appreciating assets like real estate or stocks.

Assets Only

A focus on the asset side of the balance sheet, disregarding liabilities and equity to concentrate solely on the resources owned by a company.