Answered: that 10% eventually proceeds to make a…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 2CE: Corazon Manufacturing Company has a purchasing department staffed by five purchasing agents. Each...

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Question

Suppose that a sales force has found 20 qualified buyers and has begun the sales
process. The sales manager estimates that 10% eventually proceeds to make a purchase.
Assume that a professional company offers three services, priced at $2,000, $7,000 and
$20,000, respectively. Based on past results or the sales manager’s estimates, you project
that 60% of first-time buyers will choose the cheapest option, 30% will choose the middle
option and 10% will choose the most expensive option.

b. How many qualified buyers must be found in order for the company to generate $80,
000 in sales in a given period? Your final answer must be rounded to the nearest whole
number.

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