In the past, the bottom-line profit has been calculated using a contribution margin approach with indirect costs allocated on the basis of overall sales volume of the territory as a percentage of total sales. Levita certainly realizes this is potentially problematic and has recently been reading up on activity-based costing as one way of dealing with issues such as this. She calls a meeting with the two sales managers, Ryan Roan and Fernando Perez, to discuss how they might restructure the calculations of the profit component of the salesperson incentive plan. Characters in the Role-Play Levita Wampley, VP of sales for CanDo Coffee Service Ryan Roan, sales manager for northern Florida (roughly from 1-4 northward) Fernando Perez, sales manager for southern Florida (roughly everything south of 1-4) Source: Johnston, M. W./Marshall, G. W. (2013): Sales Force ManagementAssignment Break into groups of three, with one student playing each character. It doesn't matter what the actual gender mix of your group is. Before you stage the meeting, work separately using the material in your chapter to come up with your own recommendation for a new approach to calculating the territory profit figures monthly. You can make some assumptions about the potential bases for allocation, and you can be creative in your solutions, so long as they are realistic. You will need to be prepared to justify your recommendations in the meeting. Then get together and role-play the meeting among Levita, Ryan, and Fernando. In the end, you want to come out of the meeting with a unified plan for changing this important input to their incentive program. Above all else, be sure your new system for calculating the territory profit component is fair and equitable to the CanDo salespeople. Note: Do not recommend changing their compensation/incentive plan. Assume that you are to simply fix the profit calculation.ROLE-PLAY: CANDO COFFEE SERVICE Situation Levita Wampley assumed the position of vice president of sales for the CanDo Coffee Service seven months ago. Before joining CanDo, Levita served for 12 years in various selling and sales management positions for a major restaurant food service provider. CanDo serves principally medium to large offices and factories, providing coffee pots, coffee, filters, and cups to various break rooms at their clients' places of business. The geographic area served is the state of Florida, with concentrations in the major metropolitan areas. In total, CanDo has about 2,100 established clients and a sales force of 25, plus two sales managers. Salespeople typically call on each client once every two weeks to ensure everything is going well with the service, to clean the equipment as needed, and to replenish supplies. Salespeople drive a CanDo van, which they must keep stocked appropriately from their local CanDo warehouse. CanDo operates with a very healthy margin of profit, as it is essentially providing a turnkey service to its clients-who are quite willing to pay well for avoiding the bother of performing this task. Levita has become convinced that she must address the following problem. It seems that because of differing travel requirements for salespersons' routes, varying distances from salespersons' homes to the local CanDo warehouse, differences in the nature of the facilities of clients (size, layout, ease of access, etc.), and variation in the number of break rooms in each facility that must be serviced, a growing feeling of inequity is being experienced by the CanDo sales force. The salespeople are paid on a combination of salary and commission, and the commission is based on the profitability of each sales territory. Fixed and variable costs associated with the territory are allocated to arrive at the profit component. And to complicate things more, there is also a potential for a bonus component based on signing up new customers. This compensation mix is not the problem: the problem is effectively arriving at the territory profit figure monthly so that commission payments are fair and equitable across the different client situations and travel requirements