An Insurance Company Is Considering Using Independent Sales Agents Who

Multiple Choice

An insurance company is considering using independent sales agents who would receive a 7 percent sales commission on sales or its own insurance salespeople who would receive a 5 percent commission, salaries, and benefits. Additionally, with a company salesforce, sales administration costs would be incurred for a total fixed cost of $650,000 per year. At what level of sales would independent salespeople be less costly to the firm?

A) $650,000
B) $3,250,000
C) $6,500,000
D) $32,500,000
E) $35,200,000