When the total sales expense and total cost of goods sold is ascertained, the former is divided by the latter amount to obtain the correct percentage. This is then added to the cost of sales of each salesman.
While, as a rule, general sales expense should be charged against the cost of all goods sold, there are certain exceptions when a part of this expense should be charged against specific sales. For example, a manufacturer may make a special appropriation for advertising his product in a certain state, using local papers, street cars, and bill boards. In that case the advertising is very properly chargeable against the business from that state; though it might be advisable to distribute the amount over several months.
Fig. 5. Record of a Salesman's Total Sales
A mail-order department involves certain expenses, none of which are chargeable against the business produced by the salesmen. Included in this special expense are such items as postage, stationery, printing, and stenographers' salaries. This expense should be charged against the business of the department and, if records of the work of each salesman are kept, it must be prorated on the basis of cost of goods sold by each.
Total Commodity Sales. A record of the total sales of each commodity is necessary in order that the profit in handling the commodity may be determined. Sometimes it is found that a commodity which is apparently being sold at a profit is actually sold at a loss, when the actual selling costs are determined. Or, one salesman may sell the commodity at a loss, while others sell it at a profit.
The form shown in Fig. 6 is used for a summary of the sales of one commodity. At the end of the month one of these sheets is headed with the name of each commodity and the totals entered from the salesman's commodity records, Fig. 4. Opposite the name of each salesman is entered the quantity and amount of his sales, following which is an important column headed % of whole. In this column is entered the percentage which the sales of the one salesman bear to the total sales of the commodity. If Bacon sells 40% of all the tea sold by the house, it is shown by this report; if he sells 50% of the sugar, it is shown just as plainly. Not only how much of a given commodity is sold, but who sold it, is recorded on this monthly summary.
In the columns following total sales, the total cost and gross profits are entered. From the gross profit is deducted the sales expense—this being calculated on the percentage shown for total sales expense in the recap at the bottom of the salesman's sheet, Fig. 5, leaving the net profit. In the last column, the per cent of net profit is entered. The footing at the bottom of the sheet shows total amounts and the percentages of sales expense, and net profits are calculated on the basis of these totals; this gives the average expense and profit on the total volume of sales.