Question 1

Which of the following would not be a part of a well-designed compensation package?

Accepted Answer

A)  travel expenses 
B)  salary 
C)  bonuses 
D)  commissions 
E)  all of the above could be part of a compensation package. 
A)  travel expenses 
B)  salary 
C)  bonuses 
D)  commissions 
E)  all of the above could be part of a compensation package.

Question 2

As the Vice President of Sales for a new startup company, you decide to hire and train your own field sales force. You also decide to pay your salespeople with the most common type of compensation plan among companies. This pay plan is the:

Accepted Answer

A)  salary plan. 
B)  incentive plan. 
C)  combination plan. 
D)  straight commission plan. 
E)  none of the above. 
A)  salary plan. 
B)  incentive plan. 
C)  combination plan. 
D)  straight commission plan. 
E)  none of the above.

Question 3

Salary plans are not popular with salespeople because:

Accepted Answer

A)  salaries are predictable. 
B)  salaries are stable. 
C)  they run the risk of having little or no income. 
D)  they do not provide strong incentives for extra effort. 
E)  none of the above - salary plans are always popular with salespeople. 
A)  salaries are predictable. 
B)  salaries are stable. 
C)  they run the risk of having little or no income. 
D)  they do not provide strong incentives for extra effort. 
E)  none of the above - salary plans are always popular with salespeople.

Question 4

You have read a "want ad" in the latest edition of Marketing News. The firm is looking for a Vice President for sales and promotion. The company uses a combination of brokers and independent sales reps. What kind of a compensation program would they most likely to use for their salespeople?

Accepted Answer

A)  straight salary 
B)  straight commission 
C)  salary plus bonus 
D)  commission plus bonus 
E)  salary plus commission plus bonus 
A)  straight salary 
B)  straight commission 
C)  salary plus bonus 
D)  commission plus bonus 
E)  salary plus commission plus bonus

Question 5

You are the sales manager of a large, multi-product company. Your national sales force is divided into eight regions, though the Mid-Atlantic region is currently understaffed (sales volume there has always been low). Your salespeople are paid on commission. The economy has entered a period of recession, and even the Administration's economists predict that it will remain so for at least three more quarters. In order to "weather the storm," the best course of action among those presented below is to:

Accepted Answer

A)  withdraw from the Mid-Atlantic region in order to reduce fixed costs. 
B)  shift from commission to salary in all regions in order to cut expenses. 
C)  raise commission rates on higher margin products in all regions in order to boost sales. 
D)  all of the above. 
E)  none of the above. 
A)  withdraw from the Mid-Atlantic region in order to reduce fixed costs. 
B)  shift from commission to salary in all regions in order to cut expenses. 
C)  raise commission rates on higher margin products in all regions in order to boost sales. 
D)  all of the above. 
E)  none of the above.

Question 6

Straight salary compensation is typically used in industries where:

Accepted Answer

A)  Missionary selling is the most common type of sales process used. 
B)  Team selling is seldom, if ever, used. 
C)  Personal selling is more important to the overall marketing program than other push strategies such as advertising. 
D)  A great deal of selling skill is required to close sales. 
E)  Few, if any, trade promotions are used. 
A)  Missionary selling is the most common type of sales process used. 
B)  Team selling is seldom, if ever, used. 
C)  Personal selling is more important to the overall marketing program than other push strategies such as advertising. 
D)  A great deal of selling skill is required to close sales. 
E)  Few, if any, trade promotions are used.

Question 7

When establishing goals for the compensation plan, a sales manager must consider:

Accepted Answer

A)  competitive compensation packages in the marketplace. 
B)  the needs of firm and customers. 
C)  motivation considerations of the sales force. 
D)  costs of the plan. 
E)  all of the above. 
A)  competitive compensation packages in the marketplace. 
B)  the needs of firm and customers. 
C)  motivation considerations of the sales force. 
D)  costs of the plan. 
E)  all of the above.

Question 8

Straight commission is a(an):

Accepted Answer

A)  fixed cost. 
B)  variable cost. 
C)  semi-fixed cost. 
D)  intermediate cost. 
E)  material cost. 
A)  fixed cost. 
B)  variable cost. 
C)  semi-fixed cost. 
D)  intermediate cost. 
E)  material cost.

Question 9

Which of the following statements about a straight salary compensation plan is true:

Accepted Answer

A)  Straight salary compensation plans are more complex to administer than straight commission compensation plans. 
B)  A major limitation of straight salary compensation plans is that financial rewards are not directly tied to any specific aspect of job performance. 
C)  Straight salary compensation is more commonly used with experienced salespeople than with newly hired sales recruits. 
D)  Straight salary compensation plans are most useful when sales managers want to motivate its sales force to achieve short-run sales volume increases. 
E)  It is inappropriate to use straight salary compensation for industries where missionary selling is commonplace. 
A)  Straight salary compensation plans are more complex to administer than straight commission compensation plans. 
B)  A major limitation of straight salary compensation plans is that financial rewards are not directly tied to any specific aspect of job performance. 
C)  Straight salary compensation is more commonly used with experienced salespeople than with newly hired sales recruits. 
D)  Straight salary compensation plans are most useful when sales managers want to motivate its sales force to achieve short-run sales volume increases. 
E)  It is inappropriate to use straight salary compensation for industries where missionary selling is commonplace.

Question 10

Straight salary plans often do not provide strong incentive for extra effort.

Accepted Answer

A) True 
 B)False

Question 11

When the economy and sales are expanding, some firms shift from salary to commission plans to cut expenses and lower fixed costs.

Accepted Answer

A) True 
 B)False

Question 12

The size of the bonus payment is entirely arbitrary in many salary-plus-bonus plans.

Accepted Answer

A) True 
 B)False

Question 13

Industrial sales reps are often paid with a compensation plan that can be tailored to the incentive needs of a particular firm but also has a fixed salary component. This type of plan is called:

Accepted Answer

A)  gross margin plan. 
B)  straight salary. 
C)  salary plus commission. 
D)  fringe benefit design. 
A)  gross margin plan. 
B)  straight salary. 
C)  salary plus commission. 
D)  fringe benefit design.

Question 14

Three types of expense plans that can be used include:

Accepted Answer

A)  unlimited, limited, per diem. 
B)  restricted, unrestricted, per diem. 
C)  restricted, unrestricted, partial. 
D)  full, partial, per diem. 
E)  none of the above: there are only 2 types. 
A)  unlimited, limited, per diem. 
B)  restricted, unrestricted, per diem. 
C)  restricted, unrestricted, partial. 
D)  full, partial, per diem. 
E)  none of the above: there are only 2 types.

Question 15

You have decided to change your commission structure to enhance market penetration. You now require the sales force to sell $35,000 worth of product each month to make a commission. Those who sell below $35,000 will not receive commissions. This $35,000 level is called:

Accepted Answer

A)  commission threshold. 
B)  wage cap. 
C)  progressive incentive plan. 
D)  fringe benefit stage. 
E)  none of the above. 
A)  commission threshold. 
B)  wage cap. 
C)  progressive incentive plan. 
D)  fringe benefit stage. 
E)  none of the above.

Question 16

The expense plan that is cheapest to administer is:

Accepted Answer

A)  unlimited. 
B)  per diem. 
C)  limited. 
D)  fringe benefit. 
E)  none of the above. 
A)  unlimited. 
B)  per diem. 
C)  limited. 
D)  fringe benefit. 
E)  none of the above.

Question 17

As a sales manager, you liked the advantages that salary plus bonus plans offer yet you were very concerned about some of the following serious problems associated with it:

Accepted Answer

A)  the size of individual payments are set arbitrarily. 
B)  bonus payments are too small to have any impact on the activities of salespeople. 
C)  payments are received so long after goals are achieved they provide little incentive. 
D)  both a and c of the above. 
E)  all of the above. 
A)  the size of individual payments are set arbitrarily. 
B)  bonus payments are too small to have any impact on the activities of salespeople. 
C)  payments are received so long after goals are achieved they provide little incentive. 
D)  both a and c of the above. 
E)  all of the above.

Question 18

Benefits are often preferred by salespeople because:

Accepted Answer

A)  they are more liquid than cash. 
B)  they offer tax benefits to the salesperson. 
C)  they provide more discretionary income. 
D)  they are especially made for overseas use. 
E)  none of the above. 
A)  they are more liquid than cash. 
B)  they offer tax benefits to the salesperson. 
C)  they provide more discretionary income. 
D)  they are especially made for overseas use. 
E)  none of the above.

Question 19

Your customer's buying cycle is approximately 2 years and your reps need to invest significant amounts of time understanding their customers. Your ultimate goal is to control selling expense and provide extra rewards for added results. Based on this information, which salesperson compensation plan would work best?

Accepted Answer

A)  salary only 
B)  salary plus monthly commission 
C)  salary plus year-end bonus 
D)  commission only 
E)  commission plus bonus 
A)  salary only 
B)  salary plus monthly commission 
C)  salary plus year-end bonus 
D)  commission only 
E)  commission plus bonus

Question 20

It is not clear that offering unlimited opportunities to earn higher pay will always be an effective method for continued salesperson motivation.

Accepted Answer

A) True 
 B)False

Which of the following would not be a part of a well-designed compensation package?

As the Vice President of Sales for a new startup company, you decide to hire and train your own field sales force. You also decide to pay your salespeople with the most common type of compensation plan among companies. This pay plan is the:

Salary plans are not popular with salespeople because:

You have read a "want ad" in the latest edition of Marketing News. The firm is looking for a Vice President for sales and promotion. The company uses a combination of brokers and independent sales reps. What kind of a compensation program would they most likely to use for their salespeople?

Straight salary compensation is typically used in industries where:

When establishing goals for the compensation plan, a sales manager must consider:

Straight commission is a(an):

Which of the following statements about a straight salary compensation plan is true:

Straight salary plans often do not provide strong incentive for extra effort.

When the economy and sales are expanding, some firms shift from salary to commission plans to cut expenses and lower fixed costs.

The size of the bonus payment is entirely arbitrary in many salary-plus-bonus plans.

Industrial sales reps are often paid with a compensation plan that can be tailored to the incentive needs of a particular firm but also has a fixed salary component. This type of plan is called:

Three types of expense plans that can be used include:

You have decided to change your commission structure to enhance market penetration. You now require the sales force to sell $35,000 worth of product each month to make a commission. Those who sell below $35,000 will not receive commissions. This $35,000 level is called:

The expense plan that is cheapest to administer is:

As a sales manager, you liked the advantages that salary plus bonus plans offer yet you were very concerned about some of the following serious problems associated with it:

Benefits are often preferred by salespeople because:

It is not clear that offering unlimited opportunities to earn higher pay will always be an effective method for continued salesperson motivation.

Introduction to Selling and Sales Management

Strategy and Sales Program Planning

Sales Opportunity Management

Account Relationship Management

Customer Interaction Management

Sales Force Organization

Recruiting and Selecting Personnel

Training

Leadership

Ethical Leadership

Motivating Salespeople

Evaluating Sales Force Performance

Estimating Potentials and Forecasting Sales

Territory Design

Sales Force Investment and Budgeting

Filters

Exam 12: Compensating Salespeople

Which of the following would not be a part of a well-designed compensation package?

As the Vice President of Sales for a new startup company, you decide to hire and train your own field sales force. You also decide to pay your salespeople with the most common type of compensation plan among companies. This pay plan is the:

Salary plans are not popular with salespeople because:

You have read a "want ad" in the latest edition of Marketing News. The firm is looking for a Vice President for sales and promotion. The company uses a combination of brokers and independent sales reps. What kind of a compensation program would they most likely to use for their salespeople?

Straight salary compensation is typically used in industries where:

When establishing goals for the compensation plan, a sales manager must consider:

Straight commission is a(an):

Which of the following statements about a straight salary compensation plan is true:

Straight salary plans often do not provide strong incentive for extra effort.

When the economy and sales are expanding, some firms shift from salary to commission plans to cut expenses and lower fixed costs.

The size of the bonus payment is entirely arbitrary in many salary-plus-bonus plans.

Industrial sales reps are often paid with a compensation plan that can be tailored to the incentive needs of a particular firm but also has a fixed salary component. This type of plan is called:

Three types of expense plans that can be used include:

You have decided to change your commission structure to enhance market penetration. You now require the sales force to sell $35,000 worth of product each month to make a commission. Those who sell below $35,000 will not receive commissions. This $35,000 level is called:

The expense plan that is cheapest to administer is:

As a sales manager, you liked the advantages that salary plus bonus plans offer yet you were very concerned about some of the following serious problems associated with it:

Benefits are often preferred by salespeople because:

It is not clear that offering unlimited opportunities to earn higher pay will always be an effective method for continued salesperson motivation.

Introduction to Selling and Sales Management

Strategy and Sales Program Planning

Sales Opportunity Management

Account Relationship Management

Customer Interaction Management

Sales Force Organization

Recruiting and Selecting Personnel

Training

Leadership

Ethical Leadership

Motivating Salespeople

Evaluating Sales Force Performance

Estimating Potentials and Forecasting Sales

Territory Design

Sales Force Investment and Budgeting

Filters