Question: Suppose Acore Pharmaceuticals has four sales representatives assigned to the

Suppose Acore Pharmaceuticals has four sales representatives assigned to the State of Arizona.
These sales reps are responsible for visiting physicians in their assigned area, introducing the company’s current or upcoming products, providing samples, getting feedback about the products, and generating sales. Each sales rep is given an expense budget that includes samples of Acore’s products, travel expenses related to the company vehicle that Acore provides, and entertainment expenses such as buying meals or hosting small “meet and greet” receptions.
The following table includes both budgeted and actual amounts for each sales rep for the first half of the current year. As you can see, each was allotted the same amount of resources and expected to generate the same amount of sales for the six-month period.

1. Calculate the expense and sales variances for each rep. Evaluate each of them and rank them in order of performance. Explain your rationale for these rankings. Suppose $100,000 in bonuses is available to be split among these sales reps. How would you allocate the money to them?
2. Now suppose that you find additional information about the territories to which Acore’s
Arizona reps are assigned.
• Terry has the northern Arizona territory that includes everything north of Phoenix between the California and New Mexico borders. This territory encompasses a large amount of Native American reservation land as well as the Grand Canyon National Park. Flagstaff is the largest city in the territory.
• Maria has the Phoenix area that includes the Phoenix metropolitan area and all suburbs (Glendale, Scottsdale, Mesa, and Sun City).
• Samantha’s Southwestern Arizona territory includes all areas south and west of Phoenix. Yuma is the largest city in this region.
• Abraham’s southeastern Arizona area includes everything south and east of Phoenix.
Tucson is included in this territory.
Does this new information change your evaluation of Acore’s Arizona sales reps? If so, how?
Does your allocation of the bonus money change as a result of the additional information? If so, explain how.
3. Do you need any other information to evaluate these employees’ performances for the first half of the year?
4. Do you think that Acore’s policy of allocating the same amount of expenses and expected sales to the four sales reps is adequate? What factors would you use in setting budgets for nextyear?
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  • CreatedFebruary 27, 2015
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