Evaluating an Incentive Pay Plan; Strategy Anne-Marie Fox is the manager of a boat dealership. She has decided to reevaluate the compensation plan offered to her sales representatives to determine...

Evaluating an Incentive Pay Plan; Strategy Anne-Marie Fox is the manager of a boat dealership. She has decided to reevaluate the compensation plan offered to her sales representatives to determine whether the plan encourages the dealership’s success. The representatives are paid no salary, but they receive 20% of the sales price of every boat sold, and they have the authority to negotiate the boats’ prices as far down as their wholesale cost if necessary

Required Strategically, is this plan in the dealership’s best interest, and why?

a. Yes, because the plan is likely to increase contribution margin.

b. No, because the plan is likely to reduce profits.

c. No, because the plan is likely to motivate illegal behavior.

d. Yes, because the plan is likely to increase profits.