XYZ Company expects to sell 51,000 units of its product in the coming year. Each unit sells for $45. Sales brochures and supplies for the year are expected to cost $7,000. Three sales representatives cover the Southeast region. Each one's base salary is $25,000, and each earns a sales commission of 5 percent of the selling price of the units he or she sells. The sales representatives supply their own transportation; they are reimbursed for travel at a rate of $0.40 per mile. The company estimates that the sales representatives will drive a total of 75,000 miles next year. From the information provided, calculate XYZ Company's budgeted selling expenses for the coming year.
A) $226,750
B) $176,750
C) $151,750
D) $114,750

Question

Quizplus · Accepted Answer

The budgeted selling expenses include the sales brochures and supplies ($7,000), the base salaries for the three sales representatives ($25,000 each, totaling $75,000), the sales commissions (5% of $45 per unit for 51,000 units, totaling $114,750), and the travel reimbursement ($0.40 per mile for 75,000 miles, totaling $30,000). Adding these amounts gives a total of $226,750.

XYZ Company Expects to Sell 51,000 Units of Its Product