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if you can answer the implication of findings as well. GROSS MARGIN Scenario: You are managing a six person sales force for Foothills Plastics, a

if you can answer the implication of findings as well. image text in transcribed
GROSS MARGIN Scenario: You are managing a six person sales force for Foothills Plastics, a manufacturer of small diameter polyethylene potable plastic pipe. PE pipe is useful in a variety of applications, including below-ground irrigation systems, as conduit for electrical cabling, small-diameter tubing applications (such as water softeners and beverage dispensing), various agricultural uses, such as suspending submersible water pumps, as well as for guy-guard protectors and highway markers. The PE pipe business is quite competitive, since most purchasers view it as a commodity item. This is in part due to the fact that most manufacturers produce to an ASME standard, suggesting that pipe from different manufacturers is indeed quite similar. As a result, the average gross margin on your pipe sales is 18%. One of the issues that you are currently wrestling with has to do with discounts that salespeople provide to customers (such as plumbing supply houses and large irrigation companies) in order to capture their business. Salespeople often feel that they have to offer attractive discounts in order to get the sale. In general you have supported this practice, but you are becoming concerned with the impact on the bottom line. Your sales force is paid a straight commission of 5%. Given the following information, calculate both the impact on gross margin as well as the impact on the salesperson's commission check. One of your salespeople is negotiating on an order of $5,000 (list price) with a large plumbing supplies wholesaler. In order to secure the business, she has offered a discount of 8% off of list price, $ Gross Margin at list price: $ Commission at list price: $ Gross Margin at discount: $ Commission at discount: $ Change in gross margin: $ Change in commission % Change in commission: % Change in gross margin: What are the implications of your findings

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