Sales Territory and Salesperson Profitability Analysis

Havasu Off-Road Inc. manufactures and sells a variety of commercial vehicles in the Northeast and Southwest regions. There are two salespersons assigned to each territory. Higher commission rates go to the most experienced salespersons. The following sales statistics are available for each salesperson:

	Northeast				Southwest
	Rene		Steve		Colleen		Paul
Average per unit:
Sales price	$15,500		$16,000		$14,000		$18,000
Variable cost of goods sold	$9,300		$8,000		$8,400		$9,000
Commission rate	8%		12%		10%		8%
Units sold	36		24		40		60
Manufacturing margin ratio	40%		50%		40%		50%

a. 1. Prepare a contribution margin by salesperson report. Compute the contribution margin ratio for each salesperson. Havasu Off-Road Inc. Contribution Margin by Salesperson Rene Steve Colleen Paul Contribution margin ratio 0% % % % a. 2. Interpret the report. Paul earns the Steve also sells products with a products with a contribution margin and has the contribution margin ratio. This is because he sells the average manufacturing margin but at a commission rate. Colleen has the average sales price per unit, she has the second total contribution margin. units, has a commission rate, and sells a product mix with a manufacturing margin. contribution margin ratio among the four salespersons. Although Rene has a high variable cost of goods sold and also sells b. 1. Prepare a contribution margin by territory report. Compute the contribution margin for each territory as a percent, rounded to one decimal place. Havasu Off-Road Inc. Contribution Margin by Territory Northeast Southwest Contribution margin ratio % % b. 2. Interpret the report. performance, The Southwest Region has $ more sales and s even though it also has the salesperson with the more contribution margin. In the Southwest Region, the salesperson with the highest sales unit volume, has the contribution margin ratio. The Southwest Region has the contribution margin ratio. The Northeast Region contribution margin is than the Southwest Region because of the outstanding performance of