Sales Mix
Bowling ball Corporation sells two types of bowling balls, Heavy and Light. Current sales total 80,000 units,
consisting of 30,000 Heavy units and 50,000 Light units.
Salespeople currently receive flat salaries that total $325,000. Management is considering a change
to a compensation plan that is based on commissions in an effort to increase the company's presence in the
marketplace.
Two plans are under consideration:
Plan A:	12% commission computed on gross dollar sales. Heavy sales are expected to total
	40,000 units; light sales are anticipated to be 55,000 units.
Plan B:	16% commission computed on the basis of production contribution margins. Heavy
	sales are anticipated to be 60,000 units; Light sales are expected to total 35,000 units.
Selling price and variable cost information for the bowling balls follow:
		Heavy	Light
Selling price		$72	$84
Variable cost		34	62
CM		$38	$22
Required:
1.	Comparing Plan A to the current compensation arrangement:
	a. Will Plan A achieve management's objective of an increased presence in the marketplace? Briefly explain.
	b. From a sales-mix perspective, will the salespeople be promoting the product that one would logically expect? Briefly discuss.
	c. Will the sales force likely be satisfied with the results of Plan A? Why?
	d. Will Bowling Ball Corp. likely be satisfied with the resulting impact of Plan A on company profitability? Why?
2.	Assume that Plan B is under consideration.
	a. Compare Plan A and Plan B with respect to total units and the sales mix. Comment on the results.
	b. In comparison with flat salaries, is Plan B more attractive to the sales force? To the company?
	Show calculations to support your answers.