Jackie Company's CFO provided the following information on last year's sales for two customers that purchased a variety of products from the company.
Scarborough Schultz
Sales $900,000 $800,000
Cost of Goods Sold 360,000 160,000
MSDA expenses, excluding sale commissions 640,000 130,000
a. Which customer is more profitable for the company?
b. Compare a sales incentive scheme that pays 3% of sales revenue to an incentive scheme that pays 5% of customer profit. How will each scheme affect salespersons' desire to increase sales to each customer?