Sales commissions for the Grant Company are budgeted based on a percent of sales.The sales department budgeted sales of $150,000 for total commissions of $4,500.If actual sales totaled $170,000 the flexible budget will show total commissions of:
A)$24,500
B)$5,100
C)$4,500
D)$15,500

Question

Quizplus · Accepted Answer

To find the answer, we need to first determine the commission rate. We can do this by dividing the total commissions by the budgeted sales:

$4,500 ÷ $150,000 = 0.03 or 3%

Now we can use this rate to calculate the total commissions for the actual sales amount:

$170,000 x 0.03 = $5,100

Therefore, the flexible budget will show total commissions of $5,100.

Sales Commissions for the Grant Company Are Budgeted Based on a Percent