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) none of the above.
E) all of the above.

Question

Quizplus · Accepted Answer

The contribution-margin approach will allow Ms. Winters to focus solely on the profitability of each sales rep, rather than being influenced by the allocation approach used for fixed expenses. This approach examines the revenue generated by each sales rep, minus the variable expenses associated with generating that revenue. Therefore, it provides a clearer picture of each sales rep's individual profitability. The full-cost approach takes into account both fixed and variable expenses associated with each sales rep, which may still be subject to different allocation approaches. The marketing audit approach is a broad analysis of a company's marketing strategies and their effectiveness, which may not specifically address the profitability of individual sales reps in a particular region. Therefore, the best choice in this case is A) the contribution-margin approach.

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