Murphy Consumer Products
Murphy Consumer Products is a multilevel marketing firm that sells and distributes vitamins, cosmetics, and household cleaning products to household consumers. Its products are promoted and distributed through a salesforce that is recruited primarily from college students during the winter and summer breaks. Students are recruited by answering ads which read, "Managers Needed Now! We Pay $10! No Experience Necessary!" Murphy provides very little training, and after new recruits have made initial sales to friends, relatives, and acquaintances, their productivity declines and they eventually quit. These initial sales are, nonetheless, very profitable to Murphy.
Murphy has, on average, about 280 salespeople listed on the payroll at any given time, and this has held relatively constant for several years. Murphy has been recruiting, on average, about 975 students per year for the past four years. New recruits are initially given a four hour seminar in which they are taught a canned sales presentation.
The sales presentation typically takes an hour and fifteen minutes with each new prospect. Murphy recruits are told that they will receive $10 for each qualified prospect to whom they make a demonstration, but that they must make at least twenty demonstrations per week to be able to receive this bonus. Whether or not this quota is met, Murphy pays an eighteen percent commission on sales. Murphy recruiters suggest that new recruits should be able to close a sale on one out of four prospects, and that a typical sale is an order of about $150.
Answer each of the following questions. Show ALL of the calculations that were necessary to derive your answer. Be sure that all numbers are clearly labeled as to units or what they represent.