Question

Sales section. The section has 8 salespersons. Their base pays vary from $12,000 to $36,000 per annum, according to their seniority, and are given corresponding sales targets. In addition, they get 5% commission of all sales they bring in and an additional 1% point commission for every dollar they sell above their targets. Any salesperson who sells $1 million or more gets an additional bonus of $2,000. The salespersons are ranked according to the percentage they achieve above their targets. Only if the person exceeds target, the first and second top ranked each get an incentive trip to the annual sales convention and a five-day all expenses paid vacation there for four. This year, it is in Hawaii and the incentive package is worth $6,000.
a. Construct a spreadsheet model for this. Simulate 8 salesperson’s data and compute the individual salesperson’s commission, bonus, incentive, and total compensation.
b. For your data, what is the total compensation the company has to give out?
c. What percentage of the compensation is for base pay, commission, bonus, and incentive?
d. Would you recommend any changes in the pay structure? Why?

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