Question

Steve is a sales rep for Clearwater Purification Systems, a national manufacturer of residential water treatment systems. Steve makes a commission of 25% on every system he sells, with a bonus of an additional 10% commission on sales above 17 units per year. The systems are priced at $5,620 each. The variable cost for the systems (not including sales rep commission) is $1,340 each. Clearwater gathers leads from their website and homeshows and distributes them to the local sales reps based on geographic territory. Historically, Steve has a close rate of 12% on the leads provided by Clearwater. If Steve receives 500 leads from Clearwater, how many systems can ge expect to sell based on his hisorical close rate?

Answer 1

Solution :- Expected sales (in units) = Total leads received from Clear water * Closing rate on leads.

= 500 * 12 %

= 60.

Conclusion :- Expected sales = 60 units.