As a salesperson for Allied Chemical Co., you are preparing for a planning session with your sales manager in which the two of you will work together to develop your territory sales quota for the next year. While your sales manager will input the organizational objectives into the quota-setting process, the sales manager has asked you to establish your personal sales goals for the upcoming year and bring them to the meeting.

You plan to earn a total of 80,000 dollars in the coming year. Your base compensation is 4,000 dollars per month. In addition to the base salary, Allied Chemical pays a sales commission of 8 percent on annual territory sales of more than 500,000 dollars. What territory sales goal will result in producing your 80,000 dollars personal earnings goal?

The following calculations show the territory sales goal to produce 80,000 dollars for the coming year:

Target compensation = 80,000 dollars

Base salary = 48,000 dollars (4,000 dollars per month 12 months in a year)

Gap to be made up through sales commission = Target compensation - Base Salary = 32,000 dollars (80,000 - 48,000)

Extra sales need to generate that much commission = Annual territory sales commission percent on annual territory sales = 400,000 dollars (32,000 dollars 8 percent sales commission)

Total sales needed for the coming year = Minimum annual territory sales + Extra sales required to generate receive sales commissions = 900,000 dollars (500,000 + 400,000)