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

Providing higher sales commissions for items with the greatest contribution margin per constrained resource will encourage the salespeople to promote the more profitable model as it takes into consideration not only the selling price but also the production constraints and the contribution of each product to the overall profitability of the company. This will result in salespeople focusing on selling the model with the highest contribution margin per constrained resource, which in turn will increase the profitability of the company.

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