The least likely administrative problem encountered under the straight commission method of compensating salespeople is:
A)Dividing the commission when three sales reps are involved in the sale.
B)Establishing the rate of commission.
C)Determining the commission payments on installment sales.
D)Controlling the ratio of selling expenses to net sales.
E)Handling situations involving a drawing account.

Question

Quizplus · Accepted Answer

Since straight commission compensation is based exclusively on sales, there is no fixed salary or expense control issue associated with it. Therefore, controlling the ratio of selling expenses to net sales is the least likely administrative problem encountered under the straight commission method of compensating salespeople. However, dividing commissions in situations involving multiple sales reps, determining commission payments on installment sales, and handling drawing accounts can all be more complicated administrative issues. Establishing the rate of commission is also a potential administrative challenge, but it is a one-time issue rather than an ongoing concern.

The Least Likely Administrative Problem Encountered Under the Straight Commission