Outback Outfitters is a manufacturer of recreational equipment. It has been experiencing an average growth rate…

Outback Outfitters manufactures outdoor gear.
Average revenue growth rate of 20%
In the five years before that. August 31, Chief Financial Officer
Just getting the next income statement for the company plan ready
year. it has no sales force and outsources it
Independent sales representatives may function in sales and marketing. this is the one
Broker takes 12% commission on all sales
The company also sells the following products. Next is the statement: (answer the question
d, e, f and g)

Outback Outfitters

Income Statement

for this year
As of December 31, in thousands of dollars



Production cost



Fixed overhead


60,000 (* ) Gross Margin


Sales and Administration



fixed marketing


Executive Banquet



Net Operating Income

15,000 USD

This statement is presented by the Chief Financial Officer to the Chief Executive Officer.
According to the CEO, the controller learned from the outlet that authorization had been granted.
Increase the commission rate from 16% to 16% next fiscal year. this covers
Marketing and selling products is getting more and more expensive.
Outback Outfitters.

One CEO was concerned that sales reps might ask for more information.
We hope to see commission rates increase in the future.
It will also be in charge of its sales force. He enlists the help of the chief financial officer
He gathered all the necessary information to arrange the sale.

Commission rate for own sales team

Sales Manager Annual Salary


Sales Representative Annual Salary


Entertainment and Travel




Total Additional Fixed Costs ( *) $10,600,000


a. Prepare marginal contribution
Proof of income at a commission rate of 16%

b for the next year. Calculating Contribution Margin
Assuming next year:

(1) commission rate remains the same

(2) Commission rate increased

C. find sell volume
A commission rate of 16% is required to produce the same mesh
Margin calculation for operating income below 12% commission rate
Safe commission rate below 16%.


Evaluate on calculator
Contribution Margin, Sales Breakeven Dollars and Ratio
Safety is guaranteed if the company employs its own sales force

e. Learn more
same amount as net operating income
It doesn’t matter if the company sells 16% through an agent
It might pay a commission or have its own sales force.

f. What does this mean?
What does operating leverage mean? OK joystick
The company expects to be able to make an impact next year
Suppose the company sells to an agent with a 16% commission (1)
rate and (2) have own sales force

g. based on this data
In (a), (f) and (j) below, suggest whether you think this is the case
Company should use sales representatives (16% commission rate).
Hire his sales team. please explain.

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