Question

1) We discussed how to calculate and interpret sales rep contribution to profit. Gross margin on sales generated in Mia's territory amounts to $3 million.   Using the follow information, calculate the contribution to profit in her territory.

Mia's Commissions: $30,000

Mia's Auto lease: $4,000

Mia's Benefits: $12,000

District manager’s salary: $88,000

District training manager's salary: $55,000

Mia's salary $50,000

Mia's food and lodging expenses:    $15,000

Profit = 2,889,000 (already solved for this just need #2)

2) In the scenario in question 15 Mia’s total sales volume was $6.5 million, which was 500 units of product. Using the information you have about Mia’s productivity, determine her territorial breakeven point (in units)-rounded to the nearest whole number.

A) 14

B) 38

C) 7

D) None of the above

Answer 1

(Details of question 15 not given in question.)

As per question of 1 contribution = $3 million

As per question of 1 profit = $2889000

Profit = Contribution - Fixed Cost

Fixed Cost = Contribution - Profit

Fixed Cost = $3 million - $2889000 = $111000

Contribution per unit = contribution / no. of unit sale

= $3 million / 500 units

= $6000 per unit

Breakeven point ( in units) = Fixed Cost / Contribution per unit

= $111000 / $6000 per unit

= 18.5 units

Round off = 19 units ( breakeven point)