Exam 2 Study Guide

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Federal income tax laws allow a firm to deduct all legitimate business expenses when calculating its taxable income. A) True
B) False
Correct Answer(s):| False|

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.
Correct Answer(s):| E|

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.
Correct Answer(s):| B|

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.
Correct Answer(s):| A|

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.
Correct Answer(s):| A|

In which of the following situations will the sales rep most likely be on an unlimited expense payment plan? A) Manufacturer of electric motors opening a new territory in California. B) A driver-salesperson for soft drink bottler covering part of southern Illinois. C) Wholesaler of office supplies selling to retail stores in North Carolina. D) Small manufacturer of fishing tackle who has weak financial capability. E) Detail sales rep for pharmaceutical manufacturer, calling on doctors' offices in Atlanta. Correct Answer(s):| A|

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.
Correct Answer(s):| D|

An unlimited-payment plan for controlling sales force expenses: A) Allows for cost differentials due to variations in territories or jobs. B) Is not a good plan when the salespeople are dealing with customers at the executive level. C) Eliminates expense account padding.

D) Is a poor plan to use when the salespeople are calling on new accounts. E) Is a good plan for a financially weak firm.
Correct Answer(s):| A|

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.
Correct Answer(s):| D|

Which of the following is an advantage of a limited payment plan for controlling sales force expenses? A) High caliber salespeople generally prefer this plan.
B) It is good when there are cost-of-living differentials among the territories. C) It eliminates cheating on expense accounts.
D) Management can budget its sales expenses more accurately. E) It eliminates disputes between management and sales reps. Correct Answer(s):| D|

Motivation is the only requirement for successful sales performance. A) True
B) False
Correct Answer(s):| False|

What motivates a sales rep at one time may not motivate him or her at another time. A) True
B) False
Correct Answer(s):| True|

Which of the following is (are) true about reps who in the disengagement stage of their careers? A) Their sales levels peak because of the vast experiences they have. B) Usually the psychological impact of a...
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