You are the manager of a department store in Tokyo. Sales are subject to month-to-month variations, depending on the individual salesclerk’s efforts and other factors. A new salary-plus-bonus plan has been in effect for 4 months, and you are reviewing a sales performance report. The plan provides for a base salary of ¥50,000 per month, a ¥68,000 bonus each month if the salesclerk meets the monthly sales quota, and an additional commission of 5% of all sales over the monthly quota. Each month, the quota is reset at approximately 3% above the previous month’s sales to motivate clerks to continually increase sales. The monthly quotas and actual amounts for the first 4 months of the plan are shown in the following sales report (in thousands):

1. Compute the compensation for each salesclerk for each month.

2. Evaluate the compensation plan. Be specific. What changes would you recommend?

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Salesclerk A Y4,500 ,500 ¥ 1 ,545 3,000 43,090 5,250 Y5,400 1,500 Salesclerk B ¥ 1 ,500 ,500 Y1,545 1,545 41,590 750 Y 775 780 salesclerk C 47,500 9,000 X9,270 3,000 ¥3,090 9,000 Y9,270 4,050 January February March April