Rock Creek Bottling Company pays its production manager a salary of $6,000 per month. Salespersons are paid strictly on commission, at $1.50 for each case of product sold.
For Rock Creek Bottling Company, the salespersons' commissions are an example of:
A) a fixed cost.
B) a variable cost.
C) a mixed cost.
D) none of these

Question

Quizplus · Accepted Answer

Salespersons' commissions vary based on the number of cases sold, making it a variable cost. The production manager's salary is a fixed cost, as it does not change with the level of sales.

Rock Creek Bottling Company Pays Its Production Manager a Salary