The firm has normal monthly fixed costs of 90000 38000 of


Cost Behavior and Breakeven Analysis.

COMM Company sells clothing for young adults. The firm has normal monthly fixed costs of $90,000 ($38,000 of this amount is fixed salaries). The firm's variable cost ratio averages 60%. The firm operates 3 stores in the mid-Atlantic region.

1. From the employees' perspective, what level of monthly sales dollars must COMM achieve so that their monthly compensation under the combination fixed salary/commission model is equal to the current monthly fixed salary amount (currently $38,000).

2. Prepare commentary (about 1/2 page) that reviews / evaluates the pros and cons of making the proposed compensation structure change. I'm looking for a well-rounded response that reflects upon changes in breakeven point, likely impact on employee morale / motivation, MSM operating profit at different sales levels, etc.

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Financial Accounting: The firm has normal monthly fixed costs of 90000 38000 of
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