Question 1

The ____________ method of payment uses a percentage of dollar sales in calculating compensation.

Accepted Answer

The commission method of payment typically involves a percentage of sales as compensation, making it the best choice for this question. The bonus method may include a percentage of sales, but it is not the primary factor in determining compensation. Straight salary does not involve a percentage of sales at all. Combination method may or may not include a percentage of sales, whereas employee discount is not a method of payment but a benefit.

Question 2

Once the compensation level for a producer's salespeople has been set, the particular METHOD of payment depends on the:

Accepted Answer

The method of payment for a producer's salespeople depends on multiple factors, including the need for incentive, sales quotas, desire for simplicity, and need for control. Therefore, all of the options listed in the answer choices are relevant and play a role in determining the payment method.

Question 3

With the ___________ method of payment, some salary and some commission are included.

Accepted Answer

The combination method of payment includes both a base salary and commission, providing a balance of stability and potential earnings based on performance.

Question 4

A producer wants to increase the amount of time its sales reps spend on supporting activities. It also wishes to keep its sales reps motivated and aggressive, and also provide some security. Which payment plan should the firm use?

Accepted Answer

The combination plan provides a base salary along with a commission on sales. It motivates sales reps to spend more time on supporting activities without compromising their motivation and aggressiveness to make sales. Additionally, the base salary component provides some security to the sales reps. Therefore, the combination plan is the best choice for the firm.

Question 5

The sales manager of the Retro Butterfly Chair Corp. wishes to compensate his sales force in a way which will provide some security, incentive, flexibility, and control. The company should offer its sales force:

Accepted Answer

A combination plan would provide some security through a base salary, incentive through commission on sales, flexibility through bonuses, and control through caps on commission and bonus payouts. This would be the most comprehensive and balanced approach to compensating the sales force.

Question 6

___________ is the specific sales or profit objective a salesperson is expected to achieve

Accepted Answer

Sales quota is a specific sales or profit objective that a salesperson is expected to achieve. It sets a target for the salesperson, and they are expected to meet or exceed it. The sales quota can be set for a particular time period or for specific products. It is a key metric used to evaluate a salesperson's performance.

Question 7

Regarding sales force compensation, the commission method is based on:

Accepted Answer

The answer of Regarding sales force compensation, the commission method...

Question 8

When a salesperson is expected to sell a certain number of units of a product line each month, this represents what type of incentive to this salesperson?

Accepted Answer

A sales quota is a performance metric set by a company to measure the level of sales their employees are making over a specific time period. It's usually expressed as a dollar value or a unit quantity. Therefore, when a salesperson is expected to sell a certain number of units of a product line each month, this represents a sales quota incentive to this salesperson.

Question 9

Which of the following statements about salesperson compensation is FALSE?

Accepted Answer

All the statements provided are true regarding salesperson compensation. Commissions do reduce the need for working capital, incentives should align with firm objectives, compensation plans should be clear, and sales managers are responsible for planning, implementing, and controlling the compensation plans.

Question 10

The specific sales or profit objective a salesperson is expected to achieve is known as a:

Accepted Answer

A sales quota is a specific sales or profit objective that a salesperson is expected to achieve. It is a measurable target that helps the salesperson focus on their performance and progress towards their goals. Sales ranges or standards are not specific objectives, and sales returns or maximums are not necessarily goals for the salesperson to achieve.

Question 11

The commission method of payment:

Accepted Answer

The commission method of payment offers the most incentive for the salesperson as their earnings are tied directly to their level of sales. This can motivate salespeople to work harder to achieve their sales targets and earn higher commissions.

Question 12

Which of the following sales force payment methods is best for SIMPLICITY?

Accepted Answer

Straight salary payment method is the best for simplicity as it involves paying a fixed salary to sales representatives irrespective of their sales performance, without any complex calculations or incentives.

Question 13

A merchant wholesaler who wants to provide the most INCENTIVE in his sales force payment plan should use:

Accepted Answer

Straight commission provides the most incentive as the salespeople are only paid based on their performance, which encourages them to work harder and sell more. This can lead to higher sales and profits for the company.

Question 14

The _________ compensation plan increases the amount of sales supervision needed.

Accepted Answer

The answer of The _________ compensation plan increases the amount...

Question 15

A producer wants to reduce sales force turnover AND obtain a more aggressive sales effort for its accessories. Which of the following sales force payment methods should it use?

Accepted Answer

The combination plan would be the best choice because it provides both a salary and commission component, which would incentivize the sales force to sell more aggressively while also reducing turnover. By providing a base salary, the salespeople have a sense of financial security and are less likely to leave the company. The commission component also incentivizes them to sell more accessories to earn a higher income.

Question 16

Regarding sales force payment methods:

Accepted Answer

All the statements are true regarding sales force payment methods. Each method has its own advantages, such as flexibility, security, incentive, and control, and combination plans aim to balance these factors.

Question 17

Liz Edwards is a sales associate for a major retailer of high-quality cooking supplies, housewares, and furniture. She is paid an hourly wage, plus she gets an additional sum of money that is a percentage of the dollar sales of all the sales associates combined during the hours that she works. Liz is working under a ________________________ compensation plan:

Accepted Answer

Liz's compensation plan includes both an hourly wage and a commission based on sales, which is characteristic of a combination compensation plan.

Question 18

Even though commissions are often based on a percentage of dollar sales, they can be based on _____________ instead.

Accepted Answer

Commissions can be based on a variety of factors including sales, number of new accounts, customer satisfaction ratings, and customer service problems resolved. Therefore, option D, all of the above, is the correct answer.

Question 19

A salesperson in a large furniture outlet who earns 5 percent of the dollar sales she completes each month is on what type of compensation program?

Accepted Answer

The salesperson earns a percentage (5 percent) of the dollar sales she completes each month, which is a typical straight commission plan.

Question 20

A sales compensation plan should:

Accepted Answer

A sales compensation plan should be easy for salespeople to understand to motivate them to sell more effectively. Using the same commission rates on all products (option B) may not reflect the different levels of effort required to sell each product. Offering a combination of salary and commission (option C) can motivate salespeople with guaranteed income while still incentivizing them to increase sales. Therefore, option A is the best choice.

Quiz 15: Personal Selling and Customer Service