Supersonic

stereo
SALES ORGANIZATION
PRODUCTS
PROBLEMS
1. Sales are stagnant and profits are down.

2. Sales representative Charlie

Lyons, a highly paid salesperson
was asking for salary increase
otherwise he will leave the
company
SUGGESTIONS
 Prepare a profitability
1.
analysis for each sales
representative.
 SAND GALLO PARKS LYONS TOTAL
2 638
SALES 584 170 681 450 667 385 705 335 340
COST OF 2 014
SALES 444 802 521 390 510 662 537 631 485
GROSS 623
PROFIT 139 368 160 060 156 723 167 704 855
TOTAL
EXPENSES 104 321 121 436 118 102 132 615 609 474
83
RENT 000
Other
Common 49
Costs 500
35 38 38 35 14
NET PROFIT 047.08 624.02 621.28 088.82 380.70
 Profitability Analysis
38621.28

36624.02

35047.08 35088.82

Profit
 Prepare a profitability
1.
analysis for each Lyons
customer.
 AMERICAN APPLIANCE AUDIO
TV MART EMPORIUM TOTAL
705
SALES 340 855 245 305 119 175 335
537
COST OF SALES 260 594 188 659 88 378 631
GROSS PROFIT 80 261 56 646 30 797 167 704
TOTAL
EXPENSES 60 634 43,349 28,633 132,615
NET PROFIT 19 627.49 13 297.44 2 164.33 35,089.26
GP MARGIN 0.24 0.23 0.26 0.24
NP MARGIN 0.06 0.05 0.02 0.05
 Profitability Analysis
19,627.49

13,297.44

2,162.33

Profit
 Do you agree with the way functional
3. costs were allocated? What changes
would you recommend?

No.
Travel cost should take in the average distance travelled
for order customers
Packaging should also take into account the dimensions
and weight of the products as well as that of warehousing
and transportation.

Use Activity Based Costing for

functional costs items.
4. How would you handle Charlie
Lyons' request for money??

Basler should not raise the

salary for Lyons.
 Should the sales be paid according to
5. their contribution to profit instead of
gross margin?

Ye
s
 What are the implications of paying
6. commissions only after quota has been
reached?