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o points Saved QUESTION 2 02: Version #2 4pts each, 3 questions, Total 12pts assigned. Ignore all.prior figures: Read the following Case for 02.1 -
o points Saved QUESTION 2 02: Version #2 4pts each, 3 questions, Total 12pts assigned. Ignore all.prior figures: Read the following Case for 02.1 - 02.3: You're a sales manager of Northern California Bike Company. You're wondering if you should use an internal group of sales reps ('Make decision) or if you should contract with independent sales professionals ('Buy decision'), Internally, your estimates are that the costs of base salaries and administration would be $22,000 annually plus a 4% commission on sales. The independent sales professionals would get a flat 8% commission on their sales. These cost details stay unchanged for both years, 2022 and 2023. No other costs involved. 2.1: What is the break-even sales volume level (A.K.A. Switching point), which makes the costs of internal sales reps and the costs of independent sales professionals equal to each other? Tips for Solutions: Put these two costs equal to each other hy including X as 1 unknown sales level, which is A.K.A. "Switching point" for Make ws. Buy decision. 2.2: The sales volume of your bikes next year (2022) is expected to be 5,000 bikes in the Northern California market. The average price of a bike is $100. In 2022, are you going to use your internal group of sales reps or independent sales professionals? Tips for Solutions: Compute the sales revenue (8) in 2022 first, and compare your sales revenue with the break-even sales level, which is A.K.A. "Switching point" for Make ws. Buy decision. Then, decide which one is your better choice based on both quantitative and qualitative analysis. 2.3: You expect to have 20% increase in No. of bikes sold, and the average price of your bike is expected to increase by 30% in 2023. In 2023, when all other informationcommissions and other costs is not changed, are you going to use your internal group of sales reps or independent sales professionals
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