Question

Curvy Confections is considering building a new plant in Europe. It predicts sales at the new plant to be 40,000 units at $4.00/unit. Below is a listing of estimated expenses: % of Annual Expenses that Category Total Annual Expenses are Fixed Materials $20,000 10% Labor $20,000 30% Overhead $60,000 50% Marketing Admin $10,000 50% A European firm was contracted to sell the product and will receive a commission of 45% of the sales price. No U.S. home office expenses will be allocated to the new facility How much does the European contractor expect to make in commissions? O A $110,000 O B. $72,000 OC. $49,500 OD. $50.000

Answer 1

How much does the European contractor expect to make in commissions? Answer: B. $72,000 Explanation: Total sales: (40,000 units * $4.00 per unit) Commission rate: Commission: ($160,000 ~ .45) $160,000 45% $72,000