Question 1

As a sales manager you must design a compensation plan that meets the firm's goals as well as the needs of both the firm's customers as well as your sales force. This may be difficult, as some plans encourage salespeople to sell more inventory than is needed - resulting in unhappy customers.

Accepted Answer

A) True 
 B)False  True

Question 2

With regard to compensation programs, most firms just use a draw against commission.

Accepted Answer

A) True 
 B)False  False

Question 3

Sales managers don't need to estimate how much a compensation plan will cost once it is introduced.

Accepted Answer

A) True 
 B)False  False

Question 4

A commission plus bonus plan is particularly suited to a company that uses brokers or independent sales reps.

Accepted Answer

A) True 
 B)False

Question 5

The compensation plan in which virtually every type of sales activity is rewarded, is a:

Accepted Answer

A)   progressive incentive rate plan.
B)   salary plus commission plus bonus plan.
C)   straight commission.
D)   fringe benefit plan.
E)   none of the above.

Question 6

Under a straight commission plan, sales managers usually have less control over their reps.

Accepted Answer

A) True 
 B)False

Question 7

You have just been promoted to the position of sales manager. One of your first tasks is to evaluate the level of compensation for your sales force. Which, if any, of the following sources available will help you in your task?

Accepted Answer

A)   Conference Board reports on pay levels
B)   trade association reports on pay levels
C)   Dartnell Corporation reports on pay levels
D)   all of the above
E)   none of the above, you would use instinct.

Question 8

As a sales consultant specializing in designing compensation plans, you advise your clients that the most influential factor is:

Accepted Answer

A)   To develop as many goals as possible with the plan.
B)   Drive multiple, specific salesperson behaviors.
C)   Align your pay plan with company strategy
D)   That the most expensive plan is typically the most motivating one.
E)   Design a plan to minimize salesperson compensation.

Question 9

Compensation plans should be designed to encourage salespeople to work efficiently.

Accepted Answer

A) True 
 B)False

Question 10

A good starting point for developing a sales force compensation plan is to:

Accepted Answer

A)   understand the company's strategic goals.
B)   choose methods.
C)   determine job specifications.
D)   set pay levels.
E)   assemble the plan.

Question 11

The primary benefit of salary-plus-commission plans is they allow the compensation program to be tailored to the needs of a particular firm.

Accepted Answer

A) True 
 B)False

Question 12

More firms use straight commission plans than any other type of compensation plan.

Accepted Answer

A) True 
 B)False

Question 13

In an unlimited expense account plan, a salesperson can make money for himself by cutting back on travel.

Accepted Answer

A) True 
 B)False

Question 14

You are leaning towards implementing a salary plus commission plan for your sales force. You recognize that this plan is popular because it provides:

Accepted Answer

A)   fixed income security.
B)   incentive to increase sales.
C)   both fixed income security and incentive to increase sales.
D)   stock options in all cases.
E)   none of the above.

Question 15

Disadvantages of paying straight salary include all of the following except:

Accepted Answer

A)   not providing strong incentives for extra effort.
B)   they are fixed costs.
C)   they are a relatively insecure form of payment, as compared to commission.
D)   they overpay the least productive members of a sales team.
E)   new trainees may earn almost as much as experienced salespeople with much less productivity.

Question 16

You are deciding on an expense reimbursement plan for your salespeople. You work at a small firm and don't have the staff to adequately monitor expense accounts. However, you also work in an industry where entertaining is routine. According to the text, which of the following plans is typically used by these companies?

Accepted Answer

A)   unlimited plan
B)   per diem plan
C)   limited repayment plan
D)   payroll withholding plan
E)   tax incentive plan

Question 17

The major drawback to salary plus commission plans is that they are more expensive and more costly to administer.

Accepted Answer

A) True 
 B)False

Question 18

The most common combination plan is the salary-plus-commission-plus-bonus plan.

Accepted Answer

A) True 
 B)False

Question 19

According to the Customer-Product Matrix, sales positions that focus primarily on new business development require a greater proportion of salary than incentive.

Accepted Answer

A) True 
 B)False

Question 20

__________ tends to help give the sales force the needed push to sell complex products or services and can be used to redirect salesperson efforts toward specific product lines; under this plan administrative costs tend to be high.

Accepted Answer

A)   Straight commission.
B)   Straight salary.
C)   Salary plus commission.
D)   Salary plus commission plus bonus.
E)   None of the above.

Exam 12: Compensating Salespeople

As a sales manager you must design a compensation plan that meets the firm's goals as well as the needs of both the firm's customers as well as your sales force. This may be difficult, as some plans encourage salespeople to sell more inventory than is needed - resulting in unhappy customers.

With regard to compensation programs, most firms just use a draw against commission.

Sales managers don't need to estimate how much a compensation plan will cost once it is introduced.

A commission plus bonus plan is particularly suited to a company that uses brokers or independent sales reps.

The compensation plan in which virtually every type of sales activity is rewarded, is a:

Under a straight commission plan, sales managers usually have less control over their reps.

You have just been promoted to the position of sales manager. One of your first tasks is to evaluate the level of compensation for your sales force. Which, if any, of the following sources available will help you in your task?

As a sales consultant specializing in designing compensation plans, you advise your clients that the most influential factor is:

Compensation plans should be designed to encourage salespeople to work efficiently.

A good starting point for developing a sales force compensation plan is to:

The primary benefit of salary-plus-commission plans is they allow the compensation program to be tailored to the needs of a particular firm.

More firms use straight commission plans than any other type of compensation plan.

In an unlimited expense account plan, a salesperson can make money for himself by cutting back on travel.

You are leaning towards implementing a salary plus commission plan for your sales force. You recognize that this plan is popular because it provides:

Disadvantages of paying straight salary include all of the following except:

The major drawback to salary plus commission plans is that they are more expensive and more costly to administer.

The most common combination plan is the salary-plus-commission-plus-bonus plan.

According to the Customer-Product Matrix, sales positions that focus primarily on new business development require a greater proportion of salary than incentive.

__________ tends to help give the sales force the needed push to sell complex products or services and can be used to redirect salesperson efforts toward specific product lines; under this plan administrative costs tend to be high.