Most companies compensate their sales forces with a combination of a fixed salary and a commission that is a percentage of sales. Consider two companies competing for the same customers--for example, Kellogg's and Post cereals. Suppose that Kellogg's pays its sales force a large fixed salary and a small commission, while Post pays its sales force a small fixed salary and a large commission. The total pay on average was the same for both companies.

1. Compare the sales cost structure of Kellogg's with that of Post. In your post identify which has the larger fixed cost, which has the larger variable cost, and how this affects each company's risk.
2. Comment on the incentives each pay system provides for the sales force and identify any potential ethical dilemmas for the sales personnel.