A sales rep is paid a commission on each product sold. The commission is:
A) part of the total fixed cost.
B) part of the total variable cost.
C) not included in figuring average cost.
D) part of the total cost, but not specifically a fixed cost or a variable cost.
E) None of these alternatives is correct.

Question

Quizplus · Accepted Answer

Commissions paid to sales reps are considered variable costs because they vary with the number of products sold. Unlike fixed costs, which remain constant regardless of sales volume, variable costs increase or decrease in direct proportion to sales activity.

A Sales Rep Is Paid a Commission on Each Product