Wheels, Inc. manufactures bicycles sold through retail bicycle shops in the southeastem United States. The company has two salespeople that 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 1,500 bicycle shops. To do so, however, the company would have to hire more salespeople. Each salesperson eams $40,000 plus 4 percent commission on all sales annually. Another alternative is to use the services of sales agents instead of its own sales force. Sales agents would be paid 7 percent of sales. Each sales call lasts approximately 1 hour, and each sales rep has approximately 1.250 hours per year to devote to customers. Whools needs 12 salespeople if it has 1,500 bicycle shop accounts that need to be called on ten times per year. At what level of sales would it be more cost efficient for Wheels to use to sales agents compared to its own sales force? To determine this, consider the fixed and variable costs for each alternative. What are the pros and cons of using a company's own saies force versus independent sales agents? Wheels expects sales to be than S greater less then it would be more efficient to use sales agents. (Round to the nearest dollar)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter17: Activity Resource Usage Model And Tactical Decision Making

Section: Chapter Questions

Problem 14E: Global Reach, Inc., is considering opening a new warehouse to serve the Southwest region. Darnell...