Share
Explore BrainMass

Average investment;average commission;number of customers

Client mix decision. a) Based on data given what client mix will maximize Loren's monthly commissions, assuming he works 160 hours per month? b) What other factors should Loren consider as he makes his decisions about his client mix?
Customer Group A
Average investment in company products per mo. $900
Hrs. devoted per customer per mo. 3
Average commission percentage 6%
Current number of customers 20

Customer Group B
Average investment in company products per mo. $600
Hrs. devoted per customer per mo. 1.5
Average commission percentage 5%
Current number of customers 60

Customer Group C
Average investment in company products per mo. $200
Hrs. devoted per customer per mo. 0.5
Average commission percentage 4%
Current number of customers 120

Loren receives no fee for fin. plnng advice but in addition to his salary he gets commissions on client investments in the investment services company. Group A=invests in sizable amts. in new prod. Group B=invest smaller amts. Group C=little discretionary income

Ch6, Mgmt Accounting 5th Edition (Atkinson, Young, Kaplan, Matsumara) Problem 6-38

Solution Preview

Part a)

Customer Group A
Average investment in company products per mo. $900
Average commission percentage 6%
Average commission =900*6%=$54
Hrs. devoted per customer per mo. 3
Average commission per hour =$54/3=$18.00
Current number of customers 20
Current hours =20*3=60 hours

Customer Group B
Average investment in company products per mo. $600
Average commission percentage 5%
Average ...

Solution Summary

This post shows how to calculate average investment, average commission and current number of cutomers

$2.19