Baier Building Products, Inc.: Performance Incentives and Variance Analysis in Sales Distribution

Faced with price volatility and changes in key personnel responsibilities, a small privately held distributor of commodity building products with limited resources needs to re‐evaluate its performance incentives. The company's owners and controller need your help in assessing the extent to which the current compensation scheme has encouraged opportunistic behavior, resulting in large commissions without significant movement toward the company's strategic objectives. By completing this case successfully, you will learn how to develop a balanced scorecard suitable for a small sales distribution business and learn how to compute and interpret marketing variances.