As regards sales men the per Journey Cycle JC travelling expenses as reflected

As regards sales men the per journey cycle jc

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As regards sales men the per Journey Cycle (JC) travelling expenses as reflected in their Permanent Journey Plans (PJP and JC has been described in details under the sales men evaluation methods in succeeding chapter) are Rs. 20 K in the NZ. Rs. 18 K in the EZ, Rs. 22 K in the WZ, and Rs. 16 K in the SZ, per sales man per JC. OTC advertising were Rs. 2.5 Crore, medical sampling Rs. 3 Crore, medical literature Rs. 1.2 Crore, and Gift items Rs. 1 Crore during the year under review. The Zonal expenses were as under in Rs. lacs (for the year) Table no: 4.2 N Zone E Zone W Zone S Zone A I Office administration 50 42 64 38 Traveling 39 40 43 39 Communication 26 27 28 14 Sales promotion 10 7 15 6 Distribution: C and FA 65 56 72 35 35
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TERRITORY AND PRODUCT LEVEL PROFITABILITY The average stock levels are NZ, 75 days, EZ, 80 days, WZ, 90 days, SZ, 55 days. NZ extends 17 days’ credit, EZ 18 days’ credit, WZ 26 days’ credit, and SZ 16 days’ credit in the market. We shall now evaluate territory wise and Brand wise Marketing/Sales performance. When we start such an evaluation, our process must factor in performances at both activity as well as cost levels. 4.1 COSTS Before starting out on our evaluation exercise, we shall first look at 'costs'. We are all familiar with Fixed costs and Variable costs. Fixed costs are those costs that tend to remain fixed over periods of time irrespective of volumes involved. Whereas variable costs are those costs which vary consistently with volumes produced. At times we come across costs which change not in direct proportion to volumes produced, but vary all the same at some rate, with increases in volume produced. To illustrate the case let us take an example of a T shirt manufacturer: Supposing every T shirt manufactured requires cloth costing Rs. 25.00 … (a) It also requires thread etc Rs. 6.00 … (b) The ladies who stitch the T shirts are paid per T shirt Rs. 12.00 … (c) Secondary freight 35 48 53 29 Corporate allocated 600 36
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TERRITORY AND PRODUCT LEVEL PROFITABILITY The T shirts are stitched in a factory whose rental are per month Rs. 15000.00 … (d) The factory has a manager who is paid fixed salary per month Rs. 8000.00 … (e) The factory utilises electricity which is based on the actual time the factory operates, depending on the number of T shirts being manufactured. So in case large orders are received, the factory may run late in the evenings requiring more electricity consumption. … (f) You will observe that while costs as per (a) (b) and (c) are variable in nature, viz., if 1 T shirt is manufactured the cost will be Rs. 43.00, if 2 T shirts are manufactured the costs will be Rs. 86.00 (Rs. 43.00 X 2) if 3 T shirts are manufactured the costs will be Rs. 129.00 (Rs. 43.00 X 3) and so on the costs as per (d) and (e) are fixed in nature, viz., they will not change whether 1 piece, 3 pieces, or 100 pieces are manufactured.
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