Over the past three years rothwell generated exceptionally

Assignment Help Accounting Basics
Reference no: EM13602130

Rothwell Inc. is the leader in computer-integrated manufacturing and factory automation products and services. The Rothwell product offering is segmented into 15 product categories, based on product function and primary manufacturing location. Rothwell's sales division sells all 15 product categories and is composed of 25 district offices located throughout the United States. The company is highly decentralized, with district offices responsible for setting sales price, product mix, and other variables. District offices are rewarded based on sales. Some large customers have plants in more than one of Rothwell's sales districts. In cases where sales are made to these customers, the district offices participate jointly and sales credits are shared by each district involved. The sales division compensation plan designed by L. L. Rothwell, founder of the firm, was structured so that the staff would pursue sales in each of the 15 product categories. The selling program has the following features:
• Each sales representative receives a commission based on a percentage of the sales revenue generated.
• Each district (approximately 160 sales reps) is assigned a quota for each product line, defined in terms of dollar sales.
• In addition to commission, sales reps are eligible for an annual bonus. The company calculates individual bonuses by multiplying the number of bonus points earned by the individual target bonus amount. Points are credited at the district level.
• In order for all sales reps in a district to qualify for a bonus, the district must achieve 50 percent of quota in all 15 product groups and 85 percent of quota in at least 13 groups.
• Bonus points are awarded for sales greater than 85 percent of quota.
• Five product groups have been identified as strategic to Rothwell. These "pride-level" products are weighted more heavily in bonus point calculations.
Over the past three years, Rothwell generated exceptionally high sales-and awarded record bonuses. Profits, however, were lackluster. L. L. was befuddled!
Required:
a. Evaluate the compensation situation at Rothwell.
b. Identify the types of behavior the existing system promotes and explain how such behavior may be contributing to the firm's declining profitability. Suggest improvements.

Reference no: EM13602130

Questions Cloud

Jim acquires a new seven-year class asset on september 20 : jim acquires a new seven-year class asset on september 20 2011 for 80000. he placed the asset in service on october 5
Find the maximum wavelength nm of ultraviolet light in air : solar cells are often coated with a transparent thin film of silicon monoxide sio n 1.45 to minimize re?ective losses
While gelato is sold by the cone or cup the shop measures : via gelato is a popular neighborhood gelato shop. the company has provided the following data concerning its operations
On jan 1 joplin city issued 10 serial bonds at par to : on jan 1 joplin city issued 10 serial bonds at par to finance streetlights in an area recently incorporated in the city
Over the past three years rothwell generated exceptionally : rothwell inc. is the leader in computer-integrated manufacturing and factory automation products and services. the
The josetti partnership has total partners equity of 558000 : the josetti partnership has total partners equity of 558000 which is made up of dopke capital 392000 and hughes capital
Find the maximum wavelength nm of ultraviolet light in air : solar cells are often coated with a transparent thin film of silicon monoxide sio n 1.45 to minimize re?ective losses
Among the 2286 responsants 1000 said that they only play : a polling company reported that 14 of 2286 surveyed adults said that they play baseball. complete the followingwhat is
Why are drivers for long-haul cross-country moving : why are drivers for long-haul cross-country moving companies e.g. allied van lines often franchised while moving

Reviews

Write a Review

Accounting Basics Questions & Answers

  On january 1 2001 dc company purchased equipment at a cost

on january 1 2001 dc company purchased equipment at a cost of 105000. the equipment was estimated to have a useful life

  Healthy products inc uses a traditional product costing

healthy products inc. uses a traditional product costing system to assign overhead costs uniformly to all products. to

  Preparing financial statements of a company

Grayson Bank agrees to lend the Trust Company $100,000 on January 1. Trust Company signs a $100,000, 9%, 9-month note. What is the adjusting entry required if Trust Company prepares financial statements on June 30?

  Determine ending inventories of direct materials

Determine ending inventories of Direct Materials, Work In Process, and Finished Good,  Draft an insurance claim letter for the controller,seeking reimbursment for the damage to invemtory.

  Puget sound divers is a company that provides diving

puget sound divers is a company that provides diving services such as underwater ship repairs to clients in the puget

  Penalty dispute with the epa

In May of 2009, Raymond Financial Services became involved in a penalty dispute with the EPA. At December 31, 2009, the environmental attorney for Raymond indicated that an unfavorable outcome to the dispute was probable.

  Using the step-down method what amount of maintenance

maintenance department costs of 320000 are allocated on the basis of budgeted maintenance-hours. personnel department

  Debit in the general fund

When a fire truck purchased from General Fund revenues was received, the appropriate journal entry was made in the governmental activities general journal. What account, if any, should have been debited in the General Fund?

  What is bobs actual deduction for miscellaneous itemized

Brain files a single tax return and decides to itemize his deductions. Bob's income for the year consists of $75000 of salary, $3000 long term capital gain and $1500 interst income. Bob's expenses for the year consists of $800 investment advice fe..

  Problem on accrued wages payable

During July, wage expense of $25,000 was reported on the income statement. If wages payable at July 1st was $2,000, and wages of $20,000 were paid during July, how much was accrued wages payable on July 31st?

  Assume at the end of the year management believed the

goodwill of 200000 was recorded as a result of an acquisition of a company in a previous year.what type of asset is the

  Mango cereal corporation uses a standard cost system to

mango cereal corporation uses a standard cost system to collect costs related to the production of its crunchy pickle

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd