3. At least three additional points should be brought to the attention of
management:
i. Compared to the other two lines, salaries are very high for the cook-
book line. This should be investigated to find the reason for the wide
difference in cost.
ii. The company pays a commission of 10% on the selling price of any
book. Consideration should be given to revising the commission struc-
ture to base it on contribution margin, rather than on sales.
iii. Management should consider JIT deliveries to reduce warehouse
costs.
Problem 12-23 (20 minutes)
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