Question

Voltare Estates Construction builds and remodels mansions. They have two divisions: Remodeling (existing mansions) and New Home Construction (new mansions). Each division (remodel and new home) has its own on-site supervisor. The supervisor is paid a salary of $70,000 annually. Voltare also has one salaried "estimator" who is paid $40,000 annually. The corporate office has two office administrative assistants who are paid salaries of $44,000 and $34,000 annually. The president's salary is $144,000. How much of all these described above salaries are considered "common" fixed expenses?

Multiple Choice

• $222,000

• $78,000

• $144,000

• $278,000

Answer 1

Solution:

Common fixed expenses are those which are not specifically related to any division.

Common fixed expesnes = salaries of two office administrative assistants + president's salary

= $44000 + $34000 + $144000

= $222,000