Reference no: EM132798056

Question - The Hinsdale Company produces and sells office-space dehumidifiers to companies that own or use office space.

(a) Hinsdale's materials and labor costs for producing the dehumidifiers are $3,000 per unit and the fixed costs of its dehumidifier production plant are $1.65 million. If Hinsdale sells a dehumidifier for $4,000 per unit, what is its percent contribution margin? Show your work.

(b) If Hinsdale used revenue-based compensation to pay its sales force, what would be a salesperson's sales credit for selling 20 dehumidifiers at a price of $3,800? Show your work.

(c) If Hinsdale used the profit-based compensation method described in the course to pay its sales force and sets the dehumidifier's target price at $4,000 per unit, what would be a salesperson's sales credit for selling 20 dehumidifiers at a price of $3,800? Show your work.

(d) Explain the benefit to Hinsdale's management of using the profit-based compensation method of Part (c) over revenue-based compensation for its sales force.