Lori Winters, a regional sales manager, is interested in the profitability of the different sales reps in her region. She has used a variety of different approaches for allocating fixed sales expenses to the different sales reps, but she reaches very different conclusions depending on which allocation approach is used. In this case, it would be wise for Ms. Winters to supplement her other analyses with an analysis based on
A) the contribution-margin approach.
B) the full-cost approach.
C) the marketing audit approach.
D) All of these are correct.

Question

Quizplus · Accepted Answer

The contribution-margin approach is the best choice for Ms. Winters in this case because it focuses on the revenues generated by each sales rep minus the variable expenses associated with those revenues. This approach provides a clear picture of each sales rep's profitability without being influenced by the different allocation approaches used for fixed expenses.

Lori Winters, a Regional Sales Manager, Is Interested in the Profitability