Isondo's TV and Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 2015 operations.
$$\begin{array} { l r }
\text { Sales (1,200 televisions) } & \$ 1,200,000 \
\text { Cost of goods sold } & 540,000 \
\text { Store manager's salary per year } & 108,000 \
\text { Operating costs per year } & 216,000 \
\text { Advertising and promotion per year } & 24,000 \
\text { Commissions ( } 3 \% \text { of sales) } & 36,000
\end{array}$$
-What are the estimated total costs if the company expects to sell 3,500 units next year?
A) $2,028,000
B) $3,619,000
C) $3,271,000
D) $1,429,000

Question

Isondo's TV and Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 2015 operations.
 $$\begin{array} { l r } 
\text { Sales (1,200 televisions) } & \$ 1,200,000 \
\text { Cost of goods sold } & 540,000 \
\text { Store manager's salary per year } & 108,000 \
\text { Operating costs per year } & 216,000 \
\text { Advertising and promotion per year } & 24,000 \
\text { Commissions ( } 3 \% \text { of sales) } & 36,000
\end{array}$$
-What are the estimated total costs if the company expects to sell 3,500 units next year?
A) $2,028,000
B) $3,619,000
C) $3,271,000
D) $1,429,000

Quizplus · Accepted Answer

The correct answer is A. The total costs for next year are estimated to be $2,028,000. This is calculated by multiplying the cost of goods sold per unit by the number of units expected to be sold, and then adding the store manager's salary, operating costs, advertising and promotion, and commissions.

Isondo's TV and Appliance Store Is a Small Company That