Question

Managers of Tom Brown Distributors $70,596 per year and earn a 3% sales ommission. are evaluating the compensation system for the companys sales personnel. Currently, the two salespeople have a combined salary of The company is considering two alternatives to the current compensation system. commission to 5%. The second alternative is to eliminate the salaries and pay a 12% sales commission. Sales projections under each of the compensation systems are as follows Current system Salary and 5% commission $ 1,168,016 $1,056,508 $1,264,444 (a) Write the cost equations for the current compensation system and both alternative If the Current system salary and 5% commission- 12% commission (b Given Tom Browns sales projections, and assuming that the cost of goods sold is equal to 3 % or sales, which pay system would be the most pertable on. for the x sales) + $ x sales) + $ x sales) company? Ignore all other costs. (Round unit cost to 2 declrnal places, e.จ. О.09 and inal answers to O deelami plate-s,72s.)
0 1
Add a comment Improve this question Transcribed image text
Answer #1

Solution (a) Current System Salary and 5% commission : (396 xsales) (5%xsales) (12% x sales) 70596 3% x 1056508+70596 5% x 1168016+60596 12% x 1264444 + 102291.2 + 60596 118996.8 12% commission 0 151733.3

Solution (b) Current System Salary and 5% commission 12% commission 1056508 316952.4 739555.6 1168016 350404.8 817611.2 1264444 379333.2 885110.8 Cost of goods (30% of sales) Compensation cost 102291.24 118996.8 151733.28 Net profit 637264.36 698614.4 733377.52

I hope this clarifies your answer. Pls rate and comment in case of any query.

Add a comment
Know the answer?
Add Answer to:
Managers of Tom Brown Distributors $70,596 per year and earn a 3% sales ommission. are evaluating...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • Managers of Sunland Distributors are evaluating the compensation system for the company's sales personnel. Currently, the...

    Managers of Sunland Distributors are evaluating the compensation system for the company's sales personnel. Currently, the two salespeople have a combined salary of $54,600 per year and earn a 3% sales commission. The company is considering two alternatives to the current compensation system. The first alternative is to reduce total salaries to $22,300 and increase the sales commission to 5%. The second alternative is to eliminate the salaries and pay a 25% sales commission. Sales projections under each of the...

  • Managers of Oriole Distributors are evaluating the compensation system for the company's sales personnel. Currently, the...

    Managers of Oriole Distributors are evaluating the compensation system for the company's sales personnel. Currently, the two salespeople have a combined salary of $72,207 per year and earn a 3% sales commission. The company is considering two alternatives to the current compensation system. The first alternative is to reduce total salaries to $62,207 and increase the sales commission to 5% The second alternative is to eliminate the salaries and pay a 12% sales commission Sales projections under each of the...

  • 3. What are the advantages and disadvantages of the various options that Amelectserv is evaluating ERP...

    3. What are the advantages and disadvantages of the various options that Amelectserv is evaluating ERP IMPLEMENTATION COSTS Berp Corporation: ON Premise Macrosoft ON Premise 4718 4719 Macrosoft Cloud 4.718 2080 1575 2 DOO 2250 2.250 2980 none none 1675 none 349 10.200 InitialHardware Network Costs Workstations UPS for Werkstations Laptops Server Back Server Server UPS Systems Router Network Infrastrutture set-up Total Ongoing Hardware Network Costs Hardware Maintenance Router Maintenance Network in structure Maintance 2MBPS internet line Totalt year) Total...

  • Patterson Manufacturing Background Columbia invests in family-owned businesses with a strong presence in niche markets....

    Patterson Manufacturing Background Columbia invests in family-owned businesses with a strong presence in niche markets. Columbia retains existing management and local business practices but provides centralized services, such as finance, accounting, insurance, and corporate-level management. Patterson has remained profitable since the acquisition, but its return on investment has been declining. Your first stop at the Patterson complex is a meeting with the controller. He provides some additional background: “Jessica, like her predecessors, spent most of her time with customers developing...

  • Read below and answer, Why does a business that has profit of $30,000 per year need...

    Read below and answer, Why does a business that has profit of $30,000 per year need a bank loan? Jones Electrical Distribution After several years of rapid growth, in the spring of 2007 Jones Electrical Distribution anticipated a further substantial increase in sales. Despite good profits, the company had experienced a shortage of cash and had found it necessary to increase its borrowing from Metropolitan Bank-a local one- branch bank-to $250,000 in 2006. The maximum loan that Metropolitan would make...

  • write up an essay on the problems in budgeting derived from the articles (i do Upvote...

    write up an essay on the problems in budgeting derived from the articles (i do Upvote the answers ) Why Budgeting Kills Your Company HBSWK Pub. Date: Aug '1 1, 2003 Why doesn't the budget process work? Read what experts say about not only changing your budgeting process, but whether your company should dispense with budgets entirely. by Loren Gary The average billion-dollar company spends as many as 25,000 person-days per year putting together the budget. If this all paid...

  • Please read the facts of the case and prepare answers for the following questions : 1...

    Please read the facts of the case and prepare answers for the following questions : 1 – What is the relevance of the $2,000 monthly payment to Dave Verden on the analysis of Jones’ financing needs? 2 – What metrics could you use to compare the historical financial results for Jones with the projected financial results under the four defined scenarios? 3 – Other than financing needs, what other issues should Jones address as he considers the different growth scenarios?...

  • Monica’s Designer Handbags: Creative Marketing Decision-Making Based on Financial Analysis—A Case Study Michael T. Manion University...

    Monica’s Designer Handbags: Creative Marketing Decision-Making Based on Financial Analysis—A Case Study Michael T. Manion University of Wisconsin – Parkside Karen Crooker University of Wisconsin – Parkside Peter Knight University of Wisconsin – Parkside Monica learned much about the designer apparel trade as an intern with a major retailer, and started a designer handbag business, selling through independent retailers. She practiced making sound marketing decisions using financial analysis techniques learned in college. These techniques proved useful when a regional discount...

  • CASE 1-5 Financial Statement Ratio Computation Refer to Campbell Soup Company's financial Campbell Soup statements in...

    CASE 1-5 Financial Statement Ratio Computation Refer to Campbell Soup Company's financial Campbell Soup statements in Appendix A. Required: Compute the following ratios for Year 11. Liquidity ratios: Asset utilization ratios:* a. Current ratio n. Cash turnover b. Acid-test ratio 0. Accounts receivable turnover c. Days to sell inventory p. Inventory turnover d. Collection period 4. Working capital turnover Capital structure and solvency ratios: 1. Fixed assets turnover e. Total debt to total equity s. Total assets turnover f. Long-term...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT