Springer Products manufactures three different product lines, Model X, Model Y, and Model Z. Considerable market demand exists for all models. The following per unit data apply:

How can Lisa Dynondo encourage her salespeople to promote the more profitable model?
A) Put all sales persons on fixed salary.
B) Provide higher sales commissions for higher priced items.
C) Provide higher sales commissions for items with the greatest contribution margin per constrained resource.
D) Provide higher sales commissions for items which has the lowest cost and lower sales commissions for items with highest cost.

Question

Springer Products manufactures three different product lines, Model X, Model Y, and Model Z. Considerable market demand exists for all models. The following per unit data apply:

How can Lisa Dynondo encourage her salespeople to promote the more profitable model?
A) Put all sales persons on fixed salary. 
B) Provide higher sales commissions for higher priced items. 
C) Provide higher sales commissions for items with the greatest contribution margin per constrained resource. 
D) Provide higher sales commissions for items which has the lowest cost and lower sales commissions for items with highest cost.

Quizplus · Accepted Answer

By providing higher sales commissions for items with the greatest contribution margin per constrained resource, Lisa Dynondo will incentivize her salespeople to promote the more profitable model. This approach aligns with the company's overall goal of maximizing profit and encourages salespeople to consider not just the selling price but also the constraints on production when making sales decisions. Fixed salary or commissions based solely on sales price may not incentivize salespeople to promote the most profitable model, while offering lower commissions for higher-cost items could discourage sales for all product lines.

Springer Products Manufactures Three Different Product Lines, Model X, Model