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Marathon Company makes and sells a single product. The current selling price is $$20$ per unit. Variable expenses are $$12$

per unit, and fixed expenses total $$55,000$ per month.

$($Unless otherwise stated, consider each requirement separately.$)$

Management is considering a change in the sales force compensation plan. Currently each of the firm's two salespeople is paid a

salary of $$2,500$ per month.

g$.1.$ Calculate the monthly operating income $($or loss$)$ that would result from changing the compensation plan to a salary of $$400$ per

month, plus a commission of $$0\mathrm{.}75$ per unit, assuming a sales volume of $7,500$ units per month.

Calculate the monthly operating income $($or loss$)$ that would result from changing the compensation plan to a salary of $$400$ per

month, plus a commission of $$0\mathrm{.}75$ per unit, assuming a sales volume of $8,700$ units per month.

h$.1.$ Assuming that the sales volume of $8,700$ units per month achieved in part $g$ could also be achieved by increasing advertising by

$$1,000$ per month instead of changing the sales force compensation plan. What would be the operating income or loss?

Which strategy would you recommend?

Complete this question by entering your answers in the tabs below.

Req $G1$ to $H1$

g$-1.$ Calculate the monthly operating income $($or loss$)$ that would result from changing the compensation plan to a salary of

$$400$ per month, plus a commission of $$0\mathrm{.}75$ per unit, assuming a sales volume of $7,500$ units per month.

Note: Do not round intermediate calculations.

g$-2.$ Calculate the monthly operating income $($or loss$)$ that would result from changing the compensation plan to a salary of

$$400$ per month, plus a commission of $$0\mathrm{.}75$ per unit, assuming a sales volume of $8,700$ units per month.

Note: Do not round intermediate calculations. Losses should be indicated by a minus sign.

$h-1.$ Assuming that the sales volume of $8,700$ units per month achieved in part $g$ could also be achieved by increasing

advertising by $$1,000$ per month instead of changing the sales force compensation plan. What would be the operating income

or loss?

Note: Do not round intermediate calculations. Losses should be indicated by a minus sign.

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