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Glade, Inc. is trying to decide whether to increase the commission-based pay of its salespeople.
Glade, Inc. is trying to decide whether to increase the commission-based pay of its salespeople. Currently, each of its five salespeople earns a 14% commission on the units they sell for $100 each, plus a fixed salary of $41,000. Glade hopes that by increasing commissions to 19% and decreasing each salesperson’s salary to $21,600, sales will increase because salespeople will be more motivated. Currently, sales are 14,000 units. Glade’s other fixed costs, NOT including the salespeople’s salaries, total $596,000. Glade’s other variable costs, NOT including commissions, total $12 per unit.
