Question

Golf Clubs 'n Balls is a $16 million company with 1 president and the following number of sales reps in these two territories:
-Eastern U.S. ($12 million in sales, 11 reps)
-Western U.S. ($4 million in sales, 6 reps)

The company sells two types of products (and each rep sells both products):
-Golf clubs ($10 million in sales) and
-Golf balls ($6 million in sales).

And you can assume that the following list contains information on all other costs for this company:

• Each rep is paid a straight salary of $84,518

• The company president is paid a salary of $644,845

• They recently spent $239,636 for a national TV ad which focused on golf clubs only (not balls).

• Cost of goods sold is exactly 1/2 of sales (i.e., 50%)

Do a full cost analysis, allocate indirect costs as a percent of sales, in order to calculate the net profit generated by the company's line of golf clubs. Round to nearest dollar amount.

Answer 1

* Calculate the net Profit generated by the company : Line of golf clubs:-

S.No	Particulars	Golf club	Golf balls
1	Sales	1,00,00,000	6,000,000
2	COGS	5,000,000(10,000,000,*50%)	3,000,000(6,000,000*50%)
3	Admin Costs
4	Salary of President	403,028	241817
5	Salary of Sales Rep	845180	507108
6	Cost of Add	239,636
7	Profit before tax	3,512,156	2,251,075

President Contribution

Golf Club = $644,845 * 10/16 = 403028.125

Golf balls = $ 644,845 * 6/16 = 241816.875

Sales Rep Contribution:

Golf Club = ( 84,518 * 16) * 10/16 = 845180

Golf balls = ( 84,518 * 16) * 6/16 = 507108