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

question 137

Multiple Choice

Data concerning Hinkson Corporation's single product appear below: Fixed expenses are $720,000 per month. The company is currently selling 8,000 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 $60,000 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 100 units. What should be the overall effect on the company's monthly net operating income of this change?

• A)increase of $59,100
• B)decrease of $121,700
• C)increase of $894,300
• D)decrease of $1,700

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Definitions:

Not-for-profit Agencies

Organizations that operate for purposes other than generating profit, focusing instead on serving a public or social cause.

Fiscal Considerations

Financial factors that are taken into account in the planning and management of resources, often within a government or organization.

Shareholders

Individuals or entities that own shares in a corporation, giving them certain rights and interests in the company's performance and decisions.

Diagnostic Criteria

The set of standards or conditions used to diagnose a disease, condition, or situation accurately.