Wheels, Inc. is a manufacturer of bicycles sold through retail bicycle shops in the southeastern United States. The company has two salespeople who do more than just sell the products-they manage relationships with the bicycle shops to enable them to better meet consumers' needs. The company's sales reps visit the shops several times per year, often for hours at a time. The owner of Wheels is considering expanding to the rest of the country and would like to have distribution through 4000 bicycle shops. To do so, however, the company would have to hire more salespeople. Each salesperson earns $40000 plus 2 percent commission on all sales. Another alternative is to use the services of sales agents instead of its own salesforce. Sales agents would be paid 4 percent of sales. Each sales call lasts approximately 1.7 hours, and each sales rep has approximately 1360 hours per year to devote to customers. Wheels needs 10 salespeople if it has 4,000 bicycle shop accounts that need to be called on two times per year. At what level of sales would it be more cost efficient for Wheels to use sales agents compared to its own sales force? If Wheels expects sales to be ▼ greater less than $nothing, then it would be more efficient to use sales agents. (Round to the nearest dollar.)

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter13: Emerging Topics In Managerial Accounting

Section: Chapter Questions

Problem 59P: Paladin Company manufactures plain paper fax machines in a small factory in Minnesota Sales have...

See similar textbooks

Related questions

Question

Wheels, Inc. is a manufacturer of bicycles sold through retail bicycle shops in the southeastern United States. The company has two salespeople who do more than just sell the products-they manage relationships with the bicycle shops to enable them to better meet consumers' needs. The company's sales reps visit the shops several times per year, often for hours at a time. The owner of Wheels is considering expanding to the rest of the country and would like to have distribution through 4000 bicycle shops. To do so, however, the company would have to hire more salespeople. Each salesperson earns $40000 plus 2 percent commission on all sales. Another alternative is to use the services of sales agents instead of its own salesforce. Sales agents would be paid 4 percent of sales. Each sales call lasts approximately 1.7 hours, and each sales rep has approximately

1360 hours per year to devote to customers. Wheels needs

10 salespeople if it has 4,000 bicycle shop accounts that need to be called on two times per year. At what level of sales would it be more cost efficient for Wheels to use sales agents compared to its own sales force?

If Wheels expects sales to be

▼

greater

less

than

$nothing,

then it would be more efficient to use sales agents. (Round to the nearest dollar.)

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 4 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Frauds in Accounting information system (AIS)

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions