Question
Company Xorex is selling printers. They have 36 salespeople in Canada and 48 salespeople in the US. The salary of each Canadian salesperson is $48,000
Company Xorex is selling printers. They have 36 salespeople in Canada and 48 salespeople in the US. The salary of each Canadian salesperson is $48,000 and the salary of each US salesperson is $40,000. Canadian salespeople also receive a 2% commission fee for each printer they sell and US salespeople commission fee is 5%. Each US salesperson is selling 24 printers each month, but Canadians are selling only 15 printers per month. Therefore, Xorex has decided to send 3 Canadian salespeople to the US for training each month, so all Canadian salespeople will have been trained in the US by the end of the year. They think that when all employees are trained, they can implement the new sales program and each salesperson can sell 21 printers in Canada each month. Xorex offers each Canadian employee a $4500 incentive to participate in this training program. It also pays for transportation and accommodation which costs $2500 per employee while they are being trained in the US. When Canadians are in the US, they cannot sell any printer. Also, a US salesperson should mentor the Canadian force while they are being trained, and the performance of that US salesperson drops to 25%; therefore, Xorex also pays that US mentor a $4500 incentive in addition to the regular salary. Here is the list of fixed costs: Selling price: $3400 Total variable and fixed cost (excluding the salespeople salaries and commission fees): $2000 per printer Rent and utilities: $700,000 Managerial salaries: $2,300,000 Operating expenses: $4,900,000 Marketing expenses: 1,800,000 On the basis of previous experiences, Zorex knows that training programs are worth it only when the ROI is above 150% after the first year (i.e. if ROI is less than 150%, they should not run this training program). Calculate ROI to see if Zorex should launch this training. (4 marks)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started