Below is a variable costing income statement for Wilner Glass Company, a maker of bottles for the beverage industry. For the coming year, the company is considering hiring 3 additional sales representatives at $78,400 each for base salary plus 4 percent of their sales for commissions. The company anticipates that each sales representative will generate $883,000 of incremental sale.
Wilner Glass Company
Income Statement
For the Year Ending December 31, 2014 |
| Sales |
|
|
|
$20,120,000 |
| Less: |
|
|
|
|
|
Variable cost of goods sold |
|
$8,249,200 |
|
|
|
Variable selling expense |
|
4,225,200 |
|
12,474,400 |
| Contribution margin |
|
|
|
7,645,600 |
| Less: |
|
|
|
|
|
|
Fixed production expense |
|
2,584,100 |
|
|
|
Fixed selling expense |
|
1,788,400 |
|
|
|
Fixed administrative expense |
|
2,944,200 |
|
7,316,700 |
| Net income |
|
|
|
$328,900 |
Calculate the impact on profit of the proposed hiring decision should the company hire the two additional sales representatives?