Research required to complete this assignment includes determining:
A. The most recent government (IRS) allowance for use of your personal car for business travel
B. The most recent annual cost estimates for a mid-size automobile including a breakdown of percentages or dollars for each item and totals for both fixed and variable costs
With this information in hand, analyze each option below and select the one that would be the most beneficial to you in accepting a new sales position.
You are offered a full-time sales position which recognizes your academic accomplishments at Gannon University and provides an excellent compensation program combining salary and commission. As they are very interested in you accepting the position, they offer you the choice of four automobile plans with the understanding that your territory will require you to drive between 15,000 and 20,000 miles annually. Provide a detailed analysis of each plan, costs and benefits to you and identify the plan you select and your rationale. Also include the reasons for rejecting the other plans.
Option A: TheCompany provides a mid-sized automobile for your use with all fixed and variable costs included. However, this plan does not allow any personal or family use of the car.
Option B: Again, with the understanding that you will be driving 15,000 to 20,000 miles per year on company business, they offer you a flat rate of $ 800.00 per month and you are responsible for all fixed and variable costs. The company would pay tolls and similar miscellaneous expenses.
Option C: With the same mileage understanding, the company offers to reimburse you at the rate of $ .55 per mile and you are responsible for all fixed and variable costs.
Option D: In this option, you again are responsible for all fixed and variable costs but the company will reimburse you at the rate of $ .55 for the first 15,000 miles driven (on company business) and $ .60 per mile for all mileage between 15,000 and 20,000 miles.
Again, provide a detailed analysis of each plan, costs and benefits of each to you and the rationale for your selection and the reasons for rejecting the other plans.
P.S. You might want to check IRS regulations regarding the taxability of any additional earnings resulting from the plan selected or your eligibility to deduct any personal losses due to non-reimbursement.