Karen Galactic, a sales representative for a large chemical company, gets paid a
ID: 2348481 • Letter: K
Question
Karen Galactic, a sales representative for a large chemical company, gets paid a sales commission, that is. a percentage of her sales. However, she has decided to spend less time traveling. She is going to spend only 160 hours per month with her customers. To do this she will have to give up some of her clients. The following information is from her last full month's sales activities. Required: To maximize her sale commissions, how many customers of CC. SB and PP should she retain? CC______ SB______ PP_____ Karen can hire an associate who can work up to 100 hours a month at $19 per hour (and do exactly the same job as Karen). Karen will have to reimburse the associate for travel costs. What is the expected incremental profit or loss if Karen hires the associate?Explanation / Answer
____|CC|SB|PP Total Commission|1000|3500|4000 Total Hour|40|100|200 Total Travelling Cost|100|500|800 Commission per hour|25|35|20 Travelling Cost per hour|2.5|5|4 Total Earned per hour|22.5|30|16 Therefore, to maximize profit, she need to work 100 hours in SB, 40 hours in CC and 20hours in PP Customer retained: 50 customers in SB, 10 customer in CC and 8 customer in PP 2) Since Karen only willing to work 160 hours per month, there are extra 180 hour or 72 customers in PP cannot be fulfilled. If Karen hired to Associate, the associate can works 100 hours or 40 customers Commission earned = 40*$500*0.1 = $2,000 Salary Expense = 100*$19 = $1,900 Travelling expense = 40*10 = $400 The incremental profit = 2,000 - 1,900 - 400 = -$300
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