Types of Salesforce Costs - Essay Example

Wysocki Co. pays its sales force a fixed salary plus a 5% commission on all sales. Explain why salesforce costs would be considered mixed costs.   The other element normally varies with sales volume or quantity, which a given salesperson has so far sold within a predetermined duration. Mixed cost illustration Y = q + bx Whereby q – is fixed cost, b = varying element, and x – is the extent of level activities.   Part B: Among the fixed costs of Howarth Co. are depreciation and research and development. Using these two costs as examples, explain the difference between committed and discretionary fixed costs.  Discretionary fixed costs ordinarily refer to short-term fixed costs whose occurrence is due to decisions devised by a given firm’s management regarding spending on certain items or products (Aartsengel, & Kurtoglu, 2013). These include research and development whereby they are at the discretion of the managerial team in terms of manipulating them based on an already predetermined period, for instance, quarterly, monthly, or annually. Hence, this kind of fixed costs’ flexible nature is contrary to the committed ones (Dunn, Sherwood, Stevens & Winston, 2013). Conversely, committed fixed costs, for instance, depreciation refers to long planning costs whose alterations may significantly affect the continuity of a given firm. Hence, they are inflexible (Hartman, Vang & Cornwall, 2015).    Part C: Why is it important that decision-makers in a corporation know the cost function for producing the companies' products?   Part D: What advantages does using regression analysis have over the visual-fit method for determining cost functions? - In arriving at the required results, it utilizes all the relayed data contrary to the visual fit method, which mostly leaves out some data. This is especially true when intending to link certain points of data graphically. Read More