Assumptions: 

T-company has annual sales of $100,000,000. 

T-company has 1,000 active accounts. 

Sales guys earn $50,000 / yr. and a 20% commission on sales. 

Contribution Margin is 15% including sales commission. 

Sales guys work 50 weeks per year and 40 hours per week, which translates to 2000 hours per yr. 

However, administrative tasks consume 25% of their available work time. 

Each account requires an average of 15 visits per year and each visit lasts for an average of 4 hours per visit. 

• A) Characterize the following costs as fixed or variable.
• Sales Salaries ____________ Costs
• Sales Commissions ____________ Costs 

• B) How many Sales guys are needed to support the $100,000,000 in Sales?

• C) The VP of Sales wants to increase the number of accts to 1500. How many additional sales guys does the VP of Sales need to hire?

• D) How much additional revenue must be generated to break even on the cost of the new Sales guys?

• E) How many additional accounts would have to be opened to support this sales level? Does this make sense?