Deck 10: Sales Force Quotas Expenses

Question 1

Sales Quotas are not typically related to the sales budget.

Answer 1

False

Question 2

Sales quotas are never set on the basis of past sales alone.

Answer 2

False

Question 3

Customer Satisfaction is a non-traditional type of performance goal which has become widely used to evaluate salespeople's performance.

Answer 3

True

Question 4

The most widely used type of sales quota is one based on sales activities.

Question 5

A sales quota may be assigned to a sales rep,and/or to a district office and/or to a distributor.

Question 6

Sales quotas are usually established for a time period of a year.

Question 7

Sales quotas are rarely used in conjunction with sales contests.

Question 8

A performance goal for a quota could be based on sales volume,gross margin,or number of retail displays.

Question 9

A sales volume quota based on territory potentials should not be adjusted downward simply because an older rep is covering that territory.

Question 10

Federal income tax laws allow a firm to deduct all legitimate business expenses when calculating its taxable income.

Question 11

Most criticisms of quota systems reflect management's failure to implement the system correctly.

Question 12

A sales quota based on activities performed by the sales rep is likely to decrease overemphasis on sales volume.

Question 13

The tax deductibility of business gifts is limited to $25 per year for each recipient.

Question 14

Regarding sales expenses fewer companies today are willing to pay for car phones or home photocopiers.

Question 15

Sales volume quotas may be set in direct relation to territory potentials.

Question 16

A sales quota is a performance goal assigned to a marketing unit for a specific marketing unit for a specific period of time.

Question 17

Sales quotas based on sales volume are an effective device for controlling selling expenses.

Question 18

Most companies want to keep their expenses directly related to sales volume.Consequently,expense account policies usually do not play a role in a firm's strategic marketing planning.

Question 19

Sales quotas are a useful managerial tool for controlling and directing sales force activities.

Question 20

Sales quotas are good measures for evaluating the productivity of salespeople.

Question 21

When a firm uses the straight commission method to pay its sales reps,then management can increase its control over these people by having them pay their own expenses out of their commissions.

Question 22

A firm is more likely to furnish salespeople with company-owned cars when the firm has centralized maintenance and storage facilities.

Question 23

The Runzheimer plan is a well-respected,flexible-allowance plan for reimbursing salespeople for the use of their own cars on company business.

Question 24

An expense control plan that sets selling expenses as a percentage of sales will encourage the development of new territories.

Question 25

A flat-rate-per-mile arrangement is the best method for reimbursing salespeople for the use of their own cars on company business.

Question 26

In many sales situations,salespeople are pushing their smaller customer to purchase via their company's web site.

Question 27

When companies reimburse their salespeople for expenses,these firms usually cover costs of meals when a rep is out of town,but management often puts limits on this expense item.

Question 28

A sales quota is:

A)A performance goal for a sales rep or some other market unit.
B)Not related to a company's strategic marketing plan.
C)Determines a company's sales goals.
D)The foundation of a sales forecast.
E)Not useful for a missionary sales force.

Question 29

High field selling costs are one reason for the rapid expansion of Internet-marketing.

Question 30

Management can eliminate expense-account padding by using a limited-payment method to reimburse its salespeople.

Question 31

The most common basis used for paying a bonus is:

A)A measure of total profits minus expenses.
B)A measure of performance against quota.
C)A measure of sales minus expenses.
D)A measure of the ratio profits to sales
E)A measure of performance compared to the previous year.

Question 32

Limited-payment expense control plans are not well suited for sales jobs which generally involve regular or routine activity.

Question 33

The unlimited-payment method of controlling salespeople's expenses imparts considerable flexibility to a rep's operations.

Question 34

To offset the hardships of business travel,a sound expense plan should allow sales reps to profit slightly from the plan.

Question 35

Management ordinarily can accurately forecast and budget direct selling costs,if it uses the unlimited-payment method of controlling sales reps' expenses.

Question 36

Many firms can use credit cards as a means of controlling various expense items connected with the sales reps' travel.

Question 37

Some expense plans may discourage a sales rep from performing beneficial activities.

Question 38

A sales quota is:

A)A useful tool for designing a sales organizational structure.
B)A performance goal.
C)Not useful for improving sales force morale.
D)Cannot be used when selling in foreign markets.
E)None of these.

Question 39

There is a trend toward leasing automobiles for salespeople,rather than having the company own these cars.

Question 40

All reps selling the same product in a company should be under the same expense plan in which they received the equal per diem.

Question 41

Regarding the relationship between sales quotas and strategic marketing management:

A)Quotas ordinarily guide executives in their strategic planning.
B)Setting quotas helps a sales manager to select appropriate quotas.
C)Sales force goals are usually based on sales quotas.
D)When management's goal is to increase profitability,then a sales-volume quota is appropriate.
E)None of these is correct.

Question 42

Expense quotas:

A)Are widely used.
B)May have some negative consequences.
C)Should be used in industrial selling situations.
D)All of these.
E)None of these.

Question 43

Regarding the different types of sales quotas,it is correct to say that:

A)Sales-volume quotas usually encourage the sales of high margin products.
B)Selling expense quotas are good when a firm wants to develop new markets
C)Combination quota plans typically have the advantage of being simple to compute.
D)Volume quotas are better than activity quotas when a company wants to develop good relations with customers.
E)None of these is correct.

Question 44

For which of the following groups will management most likely use an activity quota?

A)Sales reps working for a wholesale sporting goods firm.
B)Missionary salespeople working for a pharmaceutical firm calling on doctors
C)Women's ready-to-wear salesperson calling on department stores.
D)Sales reps selling janitorial supplies to industrial users.
E)Auto insurance salespeople.

Question 45

Activity quotas are most likely to be used in which situations:

A)The sales reps take no direct orders.
B)With new recruits.
C)In consumer selling.
D)All of these.
E)None of these.

Question 46

For which of the following sales jobs will management most likely use an activity quota?

A)Wholesale hardware sales rep.
B)Life insurance sales rep.
C)Liquor distributor's sales reps calling on retailers.
D)Wholesaler's salespeople selling office supplies.
E)Missionary sales rep for a soap manufacturer calling on grocery stores.

Question 47

A company is likely to use a sales volume quota when management wants:

A)A balance sales effort between selling and non-selling activities .
B)A salesperson to develop a new market.
C)To increase its gross margin.
D)To correct an unbalanced inventory situation by pushing sales of one item.
E)to keep its selling expenses at 6 percent of net sales.

Question 48

The most widely used type of sales quota is one based on:

A)Selling expenses.
B)Sales volume.
C)Missionary selling activities.
D)Gross margin.
E)Net profit.

Question 49

Which of the following is a reason for adjusting a potential based quota?

A)Management wants to increase the gross margin.
B)Past sales show an upward trend.
C)An older sales rep is covering the district.
D)The territorial potentials have been derived from the total market potential.
E)The company failed to meet its budget last year.

Question 50

When territory potentials are not directly considered,volume quotas may be set:

A)Strictly on the basis of past sales.
B)By executive judgment alone.
C)By the salespeople themselves.
D)In any of the ways above.
E)In only two of the ways above.

Question 51

The unavailability of which of the following will create the greatest difficulty in accurately setting a sales volume quota?

A)Past sales records.
B)Accurate estimates of sales potentials.
C)A good compensation plan.
D)A detailed sales budget.
E)A well designed territorial system.

Question 52

A performance goal assigned for a specific period of time to a marketing unit such as a salesperson or a branch office is:

A)An alternative basis for determining the company's sales goals.
B)The foundation for a company's strategic marketing plan.
C)A measure of a company's market share.
D)Not useful for a missionary sales force.
E)A sales quota.

Question 53

A sales quota ordinarily is used for any or all of the following purposes,except to:

A)Conduct sales contests.
B)Indicate strong or weak territories.
C)Evaluate sales reps'performances.
D)Prepare a budget.
E)Improve the effectiveness of a compensation plan.

Question 54

A company is likely to use a sales volume quota when management wants:

A)A balanced effort between selling and non-selling activities.
B)A salesperson to develop a new market.
C)To increase its gross margin.
D)To correct an unbalanced inventory situation by pushing sales of one item.
E)To keep its selling expenses at 6 percent of net sales.

Question 55

To assist in the evaluation of the productivity of salespeople,management can use:

A)Sales training Program.
B)Salary compensation plan.
C)Sales quota plan.
D)Sales force selection system.
E)Sales organization structure.

Question 56

Sales quotas are least likely to be used as an aid when management wants to:

A)Evaluate a salesperson's productivity.
B)Encourage the sales of high-margin products.
C)Increase a sales rep's incentive to do missionary selling tasks.
D)Prepare a sales budget.
E)To encourage full line selling.

Question 57

Gross margin quotas make more sense than sales volume quotas:

A)If the salespeople are paid by commission.
B)If the sales reps have control over prices.
C)If the sales force pays its own expenses.
D)All of these.
E)None of these.

Question 58

An activity quota will probably be used when management wants to:

A)Pay salespeople a straight commission on net sales.
B)Boost the sales of high margin items.
C)Enter and develop a new market.
D)Decrease the time devoted to missionary selling tasks.
E)Discourage overlapping territories.

Question 59

A sales quota will most likely act as an aid in:

A)Controlling and directing salespeople's activities.
B)Helping prepare a job description.
C)Forecasting sales.
D)Conducting sales training programs.
E)Establishing territories.

Question 60

A sales quota usually is:

A)Needed before territories can be established.
B)A key element in assimilating new people into a sales force.
C)A major aid in determining a company's sales potential.
D)A foundation of a training program.
E)None of these.

Question 61

A drawback to basing sales quotas on last year's sales is that this method:

A)Places too much emphasis on territorial sales potential.
B)Generally ignores current changes in a territory's sales potential.
C)Is a complex system to administer.
D)Ignores the fact that an older sales rep has covered the territory or is still there.
E)Cannot be used when quotas are based on sales volume.

Question 62

Which of the following sales force business expenses is likely to generate most questions from government tax auditors?

A)Hotel bills.
B)Gifts.
C)Postage.
D)Telephone.
E)Taxi fares.

Question 63

A well-designed plan for paying salespeople's expenses should:

A)Allow sales reps to earn the same net income whether they are at home or on the road.
B)Pay for all entertainment expenses incurred by a salesperson.
C)Cut down on nonselling activities.
D)Pay the same amount to each salesperson.
E)Allow just a small amount of expense account padding.

Question 64

Which of the following is usually excluded from list of legitimate travel and business expenses?

A)Office supplies purchased by sales rep.
B)Lodging costs when away on business.
C)Expenses of family car related to business use of the car.
D)Business entertainment above $25 a day.
E)None of these is excluded.

Question 65

A well-designed plan for paying salespeople's expenses should:

A)Pay the same amount to each sales rep.
B)Allow a representative to earn the same net income whether on a business trip or at home after work each day.
C)Allow for a little padding of expense accounts.
D)Be used,to some extent,in lieu of compensation,thus providing some nontaxable income to a sales representative.
E)Pay for any gift that a rep gives a customer.

Question 66

One reason for adopting a plan whereby the salespeople pay their own expenses is that:

A)Often the sales representatives prefer such a plan,because it gives them more freedom of operation.
B)It is considered good management to combine sales force compensation and expenses in one plan.
C)It increases management's control over the sales reps' activities.
D)Many companies use such a plan when their sales forces are paid a straight salary.
E)It eliminates arguments between management and the sales force regarding expenses.

Question 67

Which of the following characteristics is least likely to be found in a well-designed expense plan for sales reps?

A)Salespeople should net more income (through their expense accounts)while on the road than they earn at home,because travel is such physically hard work.
B)Expense payments normally should vary from one part of the country to another,in order to reflect the differences in living costs.
C)Minimize the disputes between management and sales force regarding expense account items.
D)Minimize,and hopefully eliminate,expense-account padding.
E)The plan should be simple and economical to administer.

Question 68

Which of the following expenses is least likely to be reimbursed by the company?

A)Business entertainment above $25 a day.
B)Fuel costs for personal use of company car.
C)Lodging costs when away from one on business.
D)Office supplies purchased by the salesperson.
E)Air coach transportation used to visit a customer.

Question 69

Today most firms are willing to pay for:

A)Laptops
B)Home photocopiers
C)Car Phones
D)Home fax machines
E)All of these

Question 70

With respect to sales reps' expenses,the federal income tax law:

A)No longer requires substantiation of entertainment expenses.
B)Limits the deductible cost of gifts to $25 a year to any one recipient.
C)Prohibits a company from using some types of transportation.
D)Does not apply if the company equitable reimburses its sales reps.
E)None of these is true.

Question 71

All of the following are characteristics of a good quota plan,except for:

A)The plan should be realistically attainable.
B)It should be easy for the reps to understand.
C)It should have unlimited flexibility.
D)The plan should be fair to the people involved.
E)It should be based on objective market research.

Question 72

Which of the following ordinarily is the least controversial sales force travel and business expense,from the company's standpoint?

A)Personal telephone calls to home.
B)Rental cars for calls on out-of-town customers.
C)Laundry.
D)Gasoline for personal use of company car.
E)Gifts for customers.

Question 73

A characteristic of a sound sales force expense plan is that it:

A)Is designed so that the reps neither profit nor lose under the plan.
B)Does not hamper the performance of selling activities.
C)Is simple and economical to administer.
D)Does All of these.
E)Accomplishes only two of A-B-C.

Question 74

Regarding the relationship between sales force expenses and strategic marketing planning:

A)There really is no relationship between these two concepts.
B)Most firms use their expense account policy primarily as a major tool for recruiting salespeople.
C)The expense control policies can be a significant factor in implementing marketing strategies.
D)Firms no longer use expense accounts to attract customers because today that is considered to be bribery.
E)None of these is correct.

Question 75

Which of the following sales force business expenses is likely to arouse most questions from government tax auditors?

A)Entertainment.
B)Air travel.
C)Office supplies.
D)Lodging.
E)Portable dictating equipment.

Question 76

With respect to sales reps' expenses,the federal income tax law:

A)Limits the number of business gifts which a firm may give.
B)Requires some substantiation of each expense which is claimed as a deduction.
C)Limits expenses as a percentage of a firm's sales.
D)Is not applicable if sales reps were to pay their own expenses.
E)Is applicable if sales reps drive their own cars on company business.

Question 77

A major criticism against sales quotas is that:

A)Activity quotas usually lead to high-pressure selling.
B)Quotas are not fair to the sales force.
C)Quotas cannot stimulate sales of profitable products.
D)Quotas are not realistically attainable.
E)It is very difficult to set quotas accurately.

Question 78

When sales-volume quotas are based on territorial potentials:

A)For psychological reasons,quotas should usually be set a little lower than the expected potential.
B)Territorial sales potentials are not a good base for setting volume quotas.
C)Sometimes quotas based on territorial potentials have to be adjusted downward because a new rep is covering that district.
D)Quotas should be related directly to territorial sales potential with no further changes being made.
E)It is a good idea to base quotas on last year's sales alone.

Question 79

A well-designed plan for paying salespeople's expenses should:

A)Treat all sales reps equitably by providing the same expense allowance for each person.
B)Allow for padding of expense accounts.
C)Pay for all entertainment expenses incurred by the salespeople.
D)Treat compensation and expenses as separate items.
E)Be used by the company in lieu of field supervision.

Question 80

Which of the following statements is true?

A)No consideration for the sales rep's age or health should be given in setting sales quotas.
B)The sales manager should involve the sales force in the development of sales quotas.
C)Sales quotas should be given to the sales force by top management to protect the sales manager from frictions with the sales force.
D)All of these.
E)None of these.