Question 45 The Year 1 selling expense budget for Karin Corporation is as follow
ID: 2479417 • Letter: Q
Question
Question 45
The Year 1 selling expense budget for Karin Corporation is as follows:
Budgeted sales
$2,500,000
Selling costs:
Delivery expenses
$25,000
Commission expenses
75,000
Advertising expenses
20,000
Office expenses
12,000
Miscellaneous expenses
30,000
Total
$ 162,000
Delivery and commission expenses vary proportionally with budgeted sales in dollars. Advertising and office expenses are fixed. Miscellaneous expenses include $10,000 of fixed costs. The rest varies with budgeted sales in dollars. The Year 2 budgeted sales is $3,400,000.
What will be the value for commission expenses in the Year 2 selling expense budget?
Budgeted sales
$2,500,000
Selling costs:
Delivery expenses
$25,000
Commission expenses
75,000
Advertising expenses
20,000
Office expenses
12,000
Miscellaneous expenses
30,000
Total
$ 162,000
Explanation / Answer
Budgeted sales 2500000 Commisssion expenses 75000 % to sales ( 75000/2500000*100) 3% Now sales increase to 3400000 Commission expense % - 3% 102000 Hence value of commission when sales are 2500000 is 102000
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