Supersonic Stereo Inc

June 25, 2018 | Author: Well Wisher | Category: Sales, Profit (Accounting), Gross Margin, Business Economics, Business
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Supersonic Stereo, Inc.People:        Pete Lockhart (National Sales Manager) Bob Basler (Sales Manager - Atlanta district) Stella Jordan (Executive) Paul Sand (Sales representative) Diane Gallo (Sales representative) Kathy Parks (Sales representative) Charlie Lyons (Sales representative) Place: Atlanta District Product:  Receivers  Turntables . a highly paid salesperson is asking for a raise or else he’ll leave the organization.47% 7.00% 1.0066 0. Speakers Price: Selling Price per Unit $ 250 $ 85 $ 125 Product Receivers Turntables Speakers Promotions:  Advertisements: 5% of Sale Problem:  Sales Y-O-Y were falling in Atlanta region.00% -7.081 $ 13.94% 0.89% Sales representative Charlie Lyons. .511 1984 $ 2.113 $ 16.74% -3. 1980 Total sales Net profit Net Profit Margin % change is sales %change in profit  $ 2.35% -12.638.120 $ 14.0059 0.873 1981 $ 2.340 $ 14.029 $ 15.0057 0.42% 6.050 1982 $ 2.383 0.445.514.28% 9.641.610.67% 4.0055 0.0053 0.381 1983 $ 2. 523 3.498 $ 3.Guidelines for Functional Cost Items: Direct Selling Customers of Charlie Lyons American TV Appliance Mart Audio Emporium Number of calls x Average time spent with each customer Direct selling per customer 65 55 3575 55 45 2475 50 45 2250 Direct selling As per customers (minutes) 3575 2475 American TV Appliance Mart 2250 Audio Emporium Commissions: 6% of gross margin Number of Units Purchased Receivers Turntables $ Paul Sand $ 1.027 Total $ 8.184 15.431 .325 $ 15.945 Charlie $ Lyons $ 1.598 $ 4.924 3.604 $ 9.362 $ 9.403 $ 10.607 $ 3.120 $ Kathy Parks $ 1.062 $ 37.876 4.860 3.813 $ Total $ 7.220 Salesperso ns Speakers $ 3.342 $ Diane Gallo $ 1. 813 $ 1.062 .876 $1.399 $ 1.120 $1.906 $962 $1.297 $ 573 $ 3.945 $1.860 Charlie Lyons $3.924 $ 1.947 4.816 Receivers American TV $ 962 Appliance Mart $ 768 Audio Emporium $ Total by product 194 $ 1.848 $ 10.906 1.924 $3.081 $ 4.297 $1.Commissions: Products vs salespersons Paul Sand Kathy Parks Diane Gallo $4.081 $573 American TV Appliance Mart $194 Audio Emporium Receivers Turntables Speakers $ 3.598 Charlie Lyons $3.523 Kathy Parks Paul Sand Receivers Turntables Customers of Charlie Lyons Speakers Number of Units Purchased Turntable s Speakers Total by customers $ $ $ 1.947 $1.607 $3.498 $3.325 Commissions: Products vs Customers Audio Emporium Appliance Mart $1.813 $4.325 $3.333 $ 1.333 $768 American TV $1.342 Diane Gallo $1. . 257 $13.963 Indirect cost $ 500 $ 500 $ 500 $ 500 Travelling cost as per salesperson $21.732 Paul Sand Customers American TV Appliance Mart Audio Emporium Charlie Lyons Travel $ 8.257 $ 13.944 $ 6.Travel: (Total travel cost/Number of calls)*Individual sales calls/Customer calls Salesperson Paul Sand Diane Gallo Kathy Parks Charlie Lyons Travel $ 10.207 $ 6.732 $ 13.888 Diane Gallo Kathy Parks $10.463 Direct cost $ 10.888 $ 21.757 $ 13.313 .463 $13.388 $ 20.232 $ 12. xlsx Questions: Q1: Do you agree with the way functional costs are allocated? What changes would you recommend?        Based on the data and the guidelines formulated by Stella Jordan and Bob Basler the functional cost focus on both order getting and order filling costs.944 American TV $6.704 $ 2.631 $ 167.060 $ 667.638. Q2: Prepare a profitability analysis for each sales representative Sale Cost Gross Margin Salaries (Direct) Paul Sand Diane Gallo Kathy Parks Charlie Lyons Total $ 584.450 $ 521.340 $ 2.485 $ 623.170 $ 444.Travelling cost as per customers $8.368 $ 681.335 $ 537.723 $ 705.390 $ 160.313 Appliance Mart Audio Emporium Supersonic Stereo Inc. Packaging should also take into account the dimensions and weight of the products.802 $ 139.855 $ $ $ $ $ . Similarly for warehousing and transportation I would suggest Activity Based Costing for FCIs instead of taking average costs.014. Some of the Functional cost items (FCIs) can be better allocated: Direct selling lacks data for other salesperson's customers Travel cost should take in the average distance travelled for orders from customers.385 $ 510.207 $6.662 $ 156. 0055 Salaries (Indirect) Sal Order processing Sal Packaging Commissions Travel Advertising Packaging Warehousing and transportation Order processing Total Expense Rent .340 $ 131.447 $ 8.708 27.209 $ 9.604 $ 13.643 $ 2.642 $ 16.073 $ 11.654 $ 770 $ 526.000 $ 14.863 $ 19.050 Net Profit $ 12.257 $ 34.861 $ 9.2365 $ 0.0398 $ 0.463 $ 35.338 $ 20.888 $ 33.732 $ 29.0212 $ 0.050 28.182 $ 165 $ 130.711 $ 3.500 $ 47.989 $ 19.431 $ 59.557 $ 21.0307 $ 0.785 $ 9.0204 $ 0.000 $ 11.2348 $ 0.000 $ 37.185 $ 76.265 $ 3.267 $ 11.500 $ 10.960 $ 234 $ 146.362 $ 10.500 $ 12.062 $ 21.500 $ 12.369 $ 11.000 $ 11.500 $ 12.927 $ 2.878 $ 26.374 $ 165 $ 126.571 $ 2.571 $ 2.350 26.917 $ 43.2378 $ 0.596 $ 2.381 Gross Profit Margin Net Profit Margin $ 0.474 $ 83.408 $ 13.214 $ 2.907 $ 10.166 $ 206 $ 146.534 106.24.403 $ 13.2349 $ 0.2386 $ 0. 927 $2.989 $165 Diane Gallo Paul Sand Though Charlie has more sales volumes but hit net profit contribution is less than that of Kathy.369 $26.888 $11.profitability analysis for each sales representative Paul Sand Diane Gallo Kathy Parks Charlie Lyons $705.704 $156.732 $9.362 $10.708 $16.000 $11.500 Kathy Parks $12.500 $21.571 $2.385 $681. .060 $146.907 $10.257 $11.209 $24.723 $160.182 $139.265 $3.571 $2.214 $2.403 $13.390 $444.960 $28.050 $19. Charlie expenses are high which lower his net profit contributions.185 $206 $33.785 $9.534 $20.062 $21.267 $126.408 $10.604 $13.447 $8.878 $12.711 $3.463 $11.500 Charlie Lyons $13.863 $234 $29. Therefore on the basis of profitability analysis Charlie can denied a salary hike.073 $27.350 $19.368 $35.643 $2.335 $667.166 $146.654 $12.596 $2.861 $9.050 $130.802 $167.631 $584.450 $537.662 $521.338 $165 $34.557 $26.170 $510. 848 $ 6.451 $ 1.928 $ 6.762 $ 110 $ 45.261 56.305 $ $ Cost 260.751 Net Profit $ 34.959 $ 2.399 $ 6. American Appliance TV Mart $ $ Sales 340.855 245.1019 0.028 $ 3.2355 0.746 $ 23.659 $ $ Gross Margin 80.797 2475 2250 Total Expense $ 4.046 Commission Travel Advertising Packaging Warehouse and transportation Order and processing Gross Profit Margin Net Profit Margin 0.207 $ 17.313 $ 5.515 $ 3.646 Direct selling (minutes) 3575 Audio Emporium $ 119.944 $ 12.195 $ 11.0927 .816 $ 8.594 188.2309 0.0946 0.549 $ 55 $ 19.2584 0.874 $ 41 $ 33.175 $ 88.578 $ 9.378 $ 30.Q3: Prepare a profitability analysis for Charlie Lyons's customers.265 $ 3.043 $ 5. 848 $6.659 $80.578 $6.944 $6.646 $30.746 $23.399 $1.265 $5.046 American TV Appliance Mart Audio Emporium America TV is the biggest customer in terms of volume and sales.043 $12.378 $45.261 $119.profitability analysis for Charlie Lyons's customers Audio Emporium Appliance Mart American TV $340. .928 $2.959 $3.855 $260.816 $3.028 $9.549 $110 $33.305 $188.575 $3.751 $55 $34.175 $88.797 $2.250 $8.475 $2.313 $17.762 $5.874 $3.594 $245.195 $11.207 $4.515 $56.451 $41 $19.


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