The company wants to spend 5% of sales on the sales force, the cost of supporting a salesperson is estimated at approximately $127,500 per person, and 15% of the sales force budget is for management and other costs. Using the percent of sales method, calculate the sales force budget, if sales are forecasted to be $12 million.

Question

Quizplus · Accepted Answer

To calculate the sales force budget using the percent of sales method, we need to follow the given steps:

Step 1: Calculate the amount to be spent on the sales force as a percentage of sales:

5% of $12 million = $600,000

Step 2: Subtract the amount set aside for management and other costs:

$600,000 x 0.15 = $90,000

$600,000 - $90,000 = $510,000

So, the sales force budget is $510,000, which is option C.

The Company Wants to Spend 5% of Sales on the Sales