In my home country the sales force expense and transportation issues are most of the companies gives incentives and daily allowance for the employees who travel every day to sell the product, the companies give money for the gas and other charges which the employee would have incurred during the sale initially the money is paid by the employee and later it is reimbursed by the company and for the employees who do not have their own transportation they would have to travel by public transport to reach the destination, in some companies they would not give any money for expenses incurred by the employee but they would be given a certain percentage of commission to motivate them by which they would be satisfied and be motivated to achieve better sales. The issues in this is few employees would provide false data and try to make more money from the company in which the company is getting cheated and the cost of the company also goes up, some of the employees with no personal vehicle would not try going far distances to sell a product because the transportation for that place would not be available or just because it is too far by this way the company might lose out on its sale for this purpose.
The problem faced by foreign sales force or a sales representative from another country are first of all the know how about place it would be very difficult for them to travel from one place to another as they would not be familiar with the place, the language also would be a barrier as the sales representative would not know to communicate with the customers properly and the cultural difference also would be problem because the customer in that country would like to be treated in a different way and rep would not know and this would not please the customer by this they could lose the sale.
The petroleum firm which is planning to sell its automobile fleet and is going to ask its sales employees to use their personal cars for business purposes by this action the company might face lots of problems. Most of the employees would not want to use their personal cars for office use as they feel they did not buy a car for using it for office purposes, some employees would not have a car and this would affect their sales as they would have to use other means of transportation and that would consume more time and money as well, employees would hesitate to use their cars because the car might be more prone to wear and tear as they would use the car more extensively, even the value of the car used by the employees would go down because they would run more miles for the office purposes, this move also would demoralize the employees because they would feel the company is taking advantage of the situation and trying to exploit them more, the company should also pay for the expense for maintaining the car and should reimburse the cash if anything happens to car when using for the office purposes, also the company should pay for the petroleum expense which would differ from one car to another this would make the company’s overall cost go up and by this company would not have complete control over the employees and the employees can false data and ask for more allowance from the company.
1) A straight 40 cents a mile: Answer = Total miles travelled a year X Cost per mile = 15000 x 0.40 = $ 600 (Which will be the total annual cost)
2) $300 a month plus 18 cents a mile = (15000 x 0.18) + (300 x 12) = $ 6300 (Which will be the total annual cost)
3) The Runzheimer plan:
Fixed cost = $398.18*12=4778.16
Operating cost = 0.1320*15000 = 1980
Total cost per rep for a year = 6758.16
Total cost for the company from 300 rep’s is= 6758.16*300=$2027448
Question 3 METHODS OF CONTROLLING EXPENSE
The method I prefer in controlling expenses is the combination plans
There are two plans in this method The first plan is the mixture of two plans which