Scenario 4: Jafrum, Inc. is a wholesale supplier of motorcycle accessories, clot

Question

Scenario 4: Jafrum, Inc. is a wholesale supplier of motorcycle accessories, clothing, and tools to
various motorcycle retail stores around the country. Jafrum does not manufacture these items, but sells
them to other retailers and also sells its merchandise through its website. Sean Thompson is one of the
salespeople for Jafrum, and is responsible for obtaining new customers, increasing sales to current
customers, and visiting the retail stores throughout the country. Recently, he has been given the sales
objective from Jafrum's management to increase sales dollars by 15% in the coming year by adding new
customers. Sean's current compensation is based on a $1,000 per month draw, plus 5% of all sales over
$100,000. His salary last year totaled $42,000. Management has given Sean the choice of going to a
compensation plan where he will earn 15% of all sales, but no draw.
Please refer to Scenario 4: Currently, Sean's compensation is based on the ________ plan, however
he is considering changing to the _________ plan.

straight salary; salary plus commission

straight commission; straight salary

salary plus commission; straight commission

salary plus bonus; straight bonus

straight salary; salary plus commission

straight commission; straight salary

salary plus commission; straight commission

salary plus bonus; straight bonus

Explanation / Answer

salary plus commission;straight commission

Currently, Sean's compensation is based on the salary plus commission plan, however he is considering changing to the straight commission plan.

Currently if we look in to the matter sean's current compensation is based on $1,000 per month draw plus 5 % of all sales which is a salary plus ompensation plan but management has given him choice to change over straight commission plan in which he will be getting straight 15% of sales and no draw.

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