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Abbott Work Wear, Inc., supplies uniforms for a variety of b...


Abbott Work Wear, Inc., supplies uniforms for a variety of businesses. Greg Michaels is a new intern in the Accounting Department at Abbott. To expand sales, the company is considering paying commissions to its sales force. The controller, John Hammond, asks Greg to complete an analysis assuming sales would increase 25% under the proposed sales commission plan. This analysis should include 1) the new breakeven sales figure and 2) the operating profit under the new sales commission plan. Greg does his best to perform the analysis. He is not exactly sure what he is doing but he does not want to appear like he does not understand accounting. After he gets his preliminary analysis finished, he calls his friend, Beth Sparrow, who is an accounting analyst at Scrubs and More, a competing uniform supplier. He knows Beth from a church group and figures he can trust her. He tells her he is working on a new project and asks her if they can meet for dinner later, where he can ask her advice. At dinner, Greg confesses to Beth that he really does not know if he did his analysis correctly. Beth assures him that she has worked on similar things at her company. She asks him if they can go over the analysis together. He readily agrees because this is just the type of help he had hoped to get. He shows her the spreadsheet he has been working on; the two of them discuss each item on the analysis. Greg explains his reasoning behind each calculation and his data assumptions. Beth tells him tha