Solve problem 23-2

Problem 23-2. cost of goods sold on a full absorption basis) contingent llection of the account. Ce tomers' credit is approved by the company's credit departe orice concessions are granted on occasion by top sales management, but sales commissions not reduced by the discou A year-end bonus of 15 percent of commissions earned is pard to salespersons who equal ce exceed their annual sales target. The annual sales target is usually established by applying a proximately a 5 percent increase to the prior year's sales. Required: a. What features of this compensation plan would seem to be effective in motivating the sales force to accomplish company goals of higher profits and return on invest- ment? Explain why. b. What features of this compensation plan would seem to be countereffective in mo- tivating the sales force to accomplish the company goals of higher profits and return on investment? Explain why. (CMA adapted) The commission is 20 percent of standard gross margin (pened selling price less standard Problem 23-2. cost of goods sold on a full absorption basis) contingent llection of the account. Ce tomers' credit is approved by the company's credit departe orice concessions are granted on occasion by top sales management, but sales commissions not reduced by the discou A year-end bonus of 15 percent of commissions earned is pard to salespersons who equal ce exceed their annual sales target. The annual sales target is usually established by applying a proximately a 5 percent increase to the prior year's sales. Required: a. What features of this compensation plan would seem to be effective in motivating the sales force to accomplish company goals of higher profits and return on invest- ment? Explain why. b. What features of this compensation plan would seem to be countereffective in mo- tivating the sales force to accomplish the company goals of higher profits and return on investment? Explain why. (CMA adapted) The commission is 20 percent of standard gross margin (pened selling price less standard