What will happen to a company’s financial risk if the company replaces sales commissions with salaries...
What will happen to a company’s financial risk if the company replaces sales commissions with salaries for the sales staff?
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A : The risk will decrease.
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B : The risk will stay the same.
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C : The risk will increase.
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D : This will not impact the risk.
Homework Answers
Answer :- The correct option is C. the risk will increase.
Risk is increased by because company fixed expenses is increased. Sales commissions is variable cost and has to pay according to sales. But once we added in salaries that means its fixed we have to pay inrespective of sales revenue.
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