Saginaw Refrigeration Company Manufactures and Sells Refrigerator and Freezer Units

question 101

Multiple Choice

Saginaw Refrigeration Company manufactures and sells refrigerator and freezer units for retailers of perishables.The company's sales manager is preparing to determine how big its sales force should bE.Its 2001 forecast includes 100,000 refrigerator units and 55,000 freezer units for a total of $38,750,000.It estimates that a typical member of its sales force could be expected to bring in $1,000,000 in sales in 2001.Its sales force expects to spend 3 hours per day (or 33 percent of their 9-hour day) in face-to-face selling.The remaining six hours will be spent servicing (20 percent) ,doing paperwork (20 percent) and traveling (27 percent) .
Each sales rep gets two weeks' vacation and two week of in-home training and meetings per year.
Saginaw Refrigeration figures that its 100 best customers should be called on every week (52 times per year) for one-half hour.Its 450 medium-sized customers should be called on twice a month for one half-hour.Its smallest customers (120) need a monthly call of 15 minutes.
-Using the breakdown method,determine the sales force size.

• A)11
• B)33
• C)39
• D)54
• E)65

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Definitions:

First-in, First-out Method

An inventory valuation method that assumes the first items purchased or produced are the first ones sold, affecting the cost of goods sold and remaining inventory.

Equivalent Units

A term used in cost accounting to express the amount of work done by incomplete units in terms of fully completed units.

Cost of Production Report

A document used in process costing that summarizes the amounts of costs for materials, labor, and overhead and assigns them to produced units.

Processing Department

A division within a factory where a particular stage of production is carried out, such as assembling or painting.