partial credit, P3-48 (similar to) Marston Corporationmanufactures housewares products that are sold through a network ofexternal sales agents. The agents are paid a commission of 19?% ofrevenues. Marston is considering replacing the sales agents withits own? salespeople, who would be paid a commission of 10?% ofrevenues and total salaries of $ 2 comma 520 comma 000. The incomestatement for the year ending December? 31, 2017?, under the twoscenarios is shown here. Marston Corporation Income Statement Forthe Year Ended December 31, 2017 Using Sales Agents Using Own SalesForce Revenues $28,000,000 $28,000,000 Cost of goods sold Variable$13,160,000 $13,160,000 Fixed 3,170,000 16,330,000 3,170,00016,330,000 Gross Margin 11,670,000 11,670,000 Marketing costsCommissions $5,320,000 $2,800,000 Fixed costs 2,644,000 7,964,0005,164,000 7,964,000 Operating income $3,706,000 $3,706,000Calculate Marston?'s 2017 contribution margin? percentage,breakeven? revenues, and degree of operating leverage under the twoscenarios. 2. Describe the advantages and disadvantages of eachtype of sales alternative. 3. In 2018?, Marston uses its own?salespeople, who demand a 15?% commission. If all other costbehavior patterns are? unchanged, how much revenue must thesalespeople generate in order to earn the same operating income asin 2017??
