Question

Balls ‘n Bats is a $24 million company with 1 president and 10 sales reps
in these two territories: Northern U.S. ($16 million in sales, 7 reps),
Southern U.S. ($8 million in sales, 3 reps).
The company sells two different products (and each rep sells both):
-Balls ($18 million in sales) and
-Bats ($6 million in sales).

And you can assume that the following list contains
information on all costs for this company:
                Each rep is paid a straight salary of $60,000
                The company president is paid a salary of $200,000
                They recently ran a national TV ad for balls, which cost $300,000;

And then separately they ran a national TV ad for bats, which cost $100,000
Cost of goods sold is exactly 75% of sales

Based on a full cost analysis that allocates indirect costs using % of sales, how much of the company profit is generated by the Southern US territory? Enter dollar amount.

Answer 1

Particular	Southern US teritorry
Sale	8,000,000
Cost of goods sold(75% of sale)	6,000,000
Gross profit	2,000,000
Salary of sales representative ( 60,000 x 3)	180,000
Salary president ( 200,000 × 8million / 24million)	66,667
Advertisement cost ( 400,000 x 8/24)	133,333
Profit	$1,620,000