Waterway Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission of 21% of sales. The income statement for the year ending December 31, 2020, is as follows. WATERWAY BEAUTY CORPORATION

Income Statement

For the Year Ended December 31, 2020

Sales $79,000,000

Cost of goods sold

Variable $32,390,000

Fixed 8,750,000 41,140,000

Gross margin $37,860,000

Selling and marketing expenses

Commissions $16,590,000

Fixed costs 10,607,200 27,197,200

Operating income $10,662,800

The company is considering hiring its own sales staff to replace the network of agents. It will pay its salespeople a commission of 9% and incur additional fixed costs of $9,480,000.

A. Calculate the company’s break-even point in sales dollars for the year 2017 if it hires its own sales force to replace the network of agents.

B. Calculate the degre