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Peter's Print Shop (PPS) is operating close to capacity. The sales department earns commissions of 8% on sales. Setup charges amount to $60 per
Peter's Print Shop (PPS) is operating close to capacity. The sales department earns commissions of 8% on sales. Setup charges amount to $60 per item, plus variable costs of $1 per copy. When capacity is reached, PPS can still meet the order, but incurs overtime charges and other variable overhead of 25 cents per copy. The production manager complains that the sales staff promise delivery within very tight deadlines in order to secure orders, which means that overtime and other variable overhead has to be paid. Required Critically evaluating the existing compensation plan and recommend any changes that would keep the organizational architecture in balance. Peter's Print Shop (PPS) is operating close to capacity. The sales department earns commissions of 8% on sales. Setup charges amount to $60 per item, plus variable costs of $1 per copy. When capacity is reached, PPS can still meet the order, but incurs overtime charges and other variable overhead of 25 cents per copy. The production manager complains that the sales staff promise delivery within very tight deadlines in order to secure orders, which means that overtime and other variable overhead has to be paid. Required Critically evaluating the existing compensation plan and recommend any changes that would keep the organizational architecture in balance.
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