Question

Salespersons' Report and Analysis

Walthman Industries Inc. employs seven salespersons to sell and distribute its product throughout the state. Data taken from reports received from the salespersons during the year ended December 31 are as follows:

Salesperson	Total Sales		Variable Cost of Goods Sold			Variable Selling Expenses
Case	$343,000		$174,930			$44,590
Dix	558,000		212,040			89,280
Johnson	500,000		250,000			80,000
LaFave	463,000		217,610			74,080
Orcas	499,000		209,580			94,810
Sussman	338,000		121,680			74,360
Willbond	452,000		144,640			85,880

Required:

1. Prepare a table indicating contribution margin, variable cost of goods sold as a percent of sales, variable selling expenses as a percent of sales, and contribution margin ratio by salesperson. Round percents to the nearest whole number. Enter all amounts as positive numbers.

Waltham Industries Inc.
Salespersons' Analysis
For the Year Ended December 31
Salesperson	Contribution Margin	Variable Cost of Goods Sold as a Percent of Sales	Variable Selling Expenses as a Percent of Sales	Contribution Margin Ratio
Case	$	%	%	%
Dix		%	%	%
Johnson		%	%	%
LaFave		%	%	%
Orcas		%	%	%
Sussman		%	%	%
Willbond		%	%	%

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Calculate:
Column 1: Contribution margin = Total sales – (Variable cost of goods sold + Variable selling expenses)
Column 2: Variable cost of goods sold as a percent of sales = Variable cost of goods sold/Total sales
Column 3: Variable selling expenses as a percent of sales = Variable selling expenses/Total sales
Column 4: Contribution margin ratio = Contribution margin/Total sales

Learning Objective 4.

2. Which salesperson generated the highest contribution margin ratio for the year?

Willbond

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Learning Objective 4.

3. Identify the factors other than contribution margin that should be considered in evaluating the performance of salespersons.

1. Rate of growth in sales for the current year compared with past years
2. Years of experience for salespersons
3. Size of sales territory
4. Actual sales compared with budgeted sales
5. All of the above

5

Answer 1

Solution:

Given

Variable cost of goods sold as a percent of sales = Variable cost of goods sold / Total sales
Variable selling expenses as a percent of sales = Variable selling expenses / Total sales
Contribution margin ratio = Contribution margin / Total sales

1) Preparing a table indicating contribution margin, variable cost of goods sold as a percent of sales, variable selling expenses as a percent of sales, and contribution margin ratio by salesperson for the year ended 31st december:

Sales person	Contribution Margin ($)	Variable Cost of Goods Sold as a Percent of Sales	Variable Selling Expenses as a Percent of Sales	Contribution Margin Ratio
Case	123,480	51 (174930 / 343000)	13 (44590/343000)	36 (123480 / 343000)
Dix	256,680	38	16	46
Johnson	170,000	50	16	34
Lafave	171,310	47	16	37
orcas	194,610	42	19	39
sussman	141,960	36	22	42
Willbond	221,480	32	19	49

Contribution Margin = Total sales - varible cost of goods sold - variable selling expenses

Sales person	Total Sales ($)	Variable Cost of Goods sold ($)	Variable selling Expenses ($)	Contribution Margin ($)
Case	343,000	174,930	44590	123,480
Dix	558,000	212,040	89,280	256,680
Johnson	500,000	250,000	80,000	170,000
LaFave	463,000	217,610	74,080	171,310
Orcas	499,000	209,580	94,810	194,610
Sussman	338,000	121,680	74,360	141,960
Willbond	452,000	144,640	85,880	221,480

2) Willbond Generated Highest contribution ratio

3)  The factors other than contribution margin that should be considered in evaluating the performance of sales persons is all the above