What accounting qualitative factors should company consider

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Reference no: EM133342145

"CHRISTMAS CORPORATION"

CHRISTMAS Corporation manufactures reality show buffs, which they sell through special sales agents. After the profit plan was presented for the coming month, CHRISTMAS Corporation's sales agents demanded that the commission be increased to 25% of total monthly sales. They believe they have been instrumental in growing the Company's customer base. If management approves this request, the marketing manager believes the unit selling price has to be increased by 10% if the company still plans to sell 250.00 units for the month. This plan is known as PROPOSAL NEVERMORE.

Upon knowing about the sales agents' request, CHRISTMAS' General Manager is proposing to employ its own dedicated sales force instead of hiring sales agents through PROPOSAL WOLVES. The sales force will be composed of one sales manager and two sales personnel, with the following selling costs: Sales Force Commission: 6.75% of total monthly sales Salary of Sales Manager: $ 32,500 per manager per month Salary of Sales Personnel: $ 17,700 per personnel per month Fixed Marketing Cost: $ 8,000 per month These costs will replace the selling expenses (both variable and fixed) in the budgeted income statement. Under PROPOSAL WOLVES, the company still plans to sell 250.00 units for the month at its budgeted selling price. No other changes from the original proposal will be made.

- PROPOSAL WOLVES WAS CHOSEN

QUESTION:

"What accounting qualitative factors should the Company consider? Enumerate at least three and advise Christmas Corp. briefly."

Reference no: EM133342145

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