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.
$$\begin{array} { l r }
\text { Sales (1,200 televisions) } & \$ 1,200,000 \
\text { Cost of goods sold } & 540,000 \
\text { Store manager's salary per year } & 108,000 \
\text { Operating costs per year } & 216,000 \
\text { Advertising and promotion per year } & 24,000 \
\text { Commissions ( } 3 \% \text { of sales) } & 36,000
\end{array}$$
-Which cost estimation method is being used by Isondo's TV and Appliance Store?
A) the operating costing method
B) the marginal costing method
C) the account analysis method
D) the cost-volume-profit analysis method

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.
 $$\begin{array} { l r } 
\text { Sales (1,200 televisions) } & \$ 1,200,000 \
\text { Cost of goods sold } & 540,000 \
\text { Store manager's salary per year } & 108,000 \
\text { Operating costs per year } & 216,000 \
\text { Advertising and promotion per year } & 24,000 \
\text { Commissions ( } 3 \% \text { of sales) } & 36,000
\end{array}$$
-Which cost estimation method is being used by Isondo's TV and Appliance Store?
A) the operating costing method
B) the marginal costing method
C) the account analysis method
D) the cost-volume-profit analysis method

Quizplus · Accepted Answer

The account analysis method is used here as costs are categorized into fixed and variable components, such as fixed salaries and variable commissions.

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