Bonita Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission of 18% of sales. The income statements for the year ending December, 31, 2014, is as follows Sales $75,000,000 Cost of Goods Sold Variable $31,500,000 Fixed 8,610,000 40,110,000 Gross Margin 34,890,000 Selling and marketing expenses Commission 13,500,000 Fixed Costs 10,260,000 23,760,000 Operating Income 11,130,000 The company is considering hiring its own sales staff to replace the network of agents. It will pay its salespeople a commission 8% and incur additional fixed costs of $7.5 million. Question: Calculate the estimated sales volume in sales dollars that would generate an identical net income for the year ending Desember 31, 2014, regardless of whether Bonita Beauty Corporation employs its own sales staff and pays them an 8% commission or continues to use the independent network of agents Thanks in advance
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Bonita Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission of 18% of sales. The income statements for the year ending December, 31, 2014, is as follows
Sales $75,000,000
Cost of Goods Sold
Variable $31,500,000
Fixed 8,610,000 40,110,000
Gross Margin 34,890,000
Selling and marketing expenses
Commission 13,500,000
Fixed Costs 10,260,000 23,760,000
Operating Income 11,130,000
The company is considering hiring its own sales staff to replace the network of agents. It will pay its salespeople a commission 8% and incur additional fixed costs of $7.5 million.
Question: Calculate the estimated sales volume in sales dollars that would generate an identical net income for the year ending Desember 31, 2014, regardless of whether Bonita Beauty Corporation employs its own sales staff and pays them an 8% commission or continues to use the independent network of agents
Thanks in advance
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