Drake, Inc. manufactures electric welders that it sells to other manufacturers, and sales last year were $45 million. Drake has a 35% contribution margin. The marketing manager has suggested increasing the number of sales representatives by five, which would cause fixed costs to increase by $250,000.
A. What incremental dollar volume would be necessary to break even on the suggestion to hire five additional sales reps?
Note: To receive full credit, include the analytical equations or an explanation of the formulas used to determine your answers.