Question

Stuart Corporation paid one of its sales representatives $9,500 during the month of March. The rep is paid a base salary plus $15 per unit of product sold. During March, the rep sold 180 units. Required Calculate the total monthly cost of the sales representative's salary for each of the following months: May July Month Number of units sold April 220 June 230 230 130 140 Total variable cost Total fixed cost Total salary cost $ 0 $ 0 $ 0 $

Answer 1

Ans.	Month	April	May	June	July
	Number of units sold	220	130	230	140
	Total variable cost (a)	$3,300	$1,950	$3,450	$2,100
	Total fixed cost (b)	$6,800	$6,800	$6,800	$6,800
	Total salary cost (a+b)	$10,100	$8,750	$10,250	$8,900
	*WORKING NOTES:
	In the month of March, variable cost per unit is $15 per unit, and the variable cost per unit always remians constant.
	So the variable cost per unit in each month will be $15 per unit.
	Total variable cost =   Variable cost per unit * Number of units sold
		April	May	June	July
	Variable cost	220 * $15	130 * $15	230 * $15	140 * $15
	Total variable cost (March) = Units sold in March * Variable cost per unit
	180 * $15   =    $2,700
	Total fixed cost always remain same in each month or each unit sold. So, we need to calculate the total fixed cost of
	March month.
	Total salary cost	$9,500
	Less: Total variable cost	-$2,700
	Total fixed cost	$6,800
	*Total fixed cost is $6,800 which will remain same in each month.