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Assume (1) total sales are $300,000, (2) the direct labor cost of $40,000 is 25% of total conversion costs and 40% of total prime costs, (3) the total selling and administrative expense is $62,000. (4) the only variable selling and administrative expense is sales commissions of 4% of sales, (5) all manufacturing overhead costs are fixed costs, and (6) there are no beginning or ending inventories.What is the total variable selling and administrative cost

Sagot :

Variable selling and administrative expense is $12,000

Given:

Total sales = $300,000

Direct labor cost = $40,000 is 25% of total conversion costs and 40% of total prime costs

Total selling and administrative expense = $62,000

Variable selling and administrative expense = Sales commissions of 4% of sales

Find:

Total variable selling and administrative cost

Computation:

Variable selling and administrative expense = Sales commissions of 4% of sales × Total sales

Variable selling and administrative expense = 4% × $300,000

Variable selling and administrative expense = $12,000

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