Capitol Enterprises uses the cost-sales ratio to measure the performance of its salespeople. If, in the past year, a salesperson made $800,000 in sales, had travel expenses of $23,000, and received a base salary of $40,000 plus $6,000 in commissions, what was this sales rep's cost-sales ratio (to the nearest whole number percent)?
A) 3 percent
B) 6 percent
C) 9 percent
D) 12 percent
E) 15 percent

Question

Quizplus · Accepted Answer

First, we need to determine the total cost of the salesperson, which is the sum of their base salary, commissions, and travel expenses:
$40,000 + $6,000 + $23,000 = $69,000

Next, we can use the cost-sales ratio formula:
Cost-Sales Ratio = (Total Cost / Total Sales) x 100%

Plugging in the values we have:
Cost-Sales Ratio = ($69,000 / $800,000) x 100% = 8.625%

Rounding to the nearest whole number percent gives us an answer of 9 percent (C).

Capitol Enterprises Uses the Cost-Sales Ratio to Measure the Performance