Question
In: Accounting
Mark from Mark's Mowers wants to make some changes to his business. He has asked each...
Mark from Mark's Mowers wants to make some changes to his business. He has asked each of his department managers (Production, Marketing and Sales) to submit a plan for growth to you the General Manager.
Currently Mark is selling 500 lawn mowers a month at $250 each. His variable cost per lawnmower is $180 each. His fixed cost per month are $ 25,000.
For purposes of this project assume that each scenario is within the relevant range (no larger space is needed, no additional people will be needed, and no additional fixed cost will be necessary.
The Sales Department is considering three different alternatives.
How much money will Mark make in each of the separate situations? Which of the scenarios is best and why?
1. Offer a commission of $ 5 per mower to the sales force. They believe that this will increase sales by at least 20 units.
2. Offer a commission to the sales force of $15 per mower. They believe that this will increase sales by at least 35 units per month.
3. Offer a commission of $ 25 per mower and increase the cost of the mower by $10. Even with the higher price, they believe it would increase mower sales by at least 40 mowers per month.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
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at $250 each. His variable cost per lawnmower is $140 each. His
fixed cost per month is $ 25,000. For purposes of this project
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