Question

Reliant Inc. operates a chain of retail stores selling household items. The Appliance division is among the most profitable in the company and, of those, the high-end refrigerators show the strongest sales. For August, the company incurred the following costs for refrigerator sales.

Professional sales staff commissions $126,000.00

Amortization on office space $6,000.00

Selling supplies $9,600.00

Office staff expenses $37,200.00

Customer relations $12,900.00

Training expenses $9,000.00 Utilities $2,100.00

Required:

(A)Which of the costs listed above can be traced directly to refrigerator sales?

(B) What is the total cost for refrigerators?

(C)What is the total cost of the sales support for refrigerators?

Answer 1

(A) Costs that can be traced directly to refrigerator sales are:

	$
Professional sales staff commissions	$126,000
Selling supplies	9,600
Customer relations	12,900
Training expenses	9,000
Utilities	2,100
Total	159,600

(B) Calculation of total cost for refrigerators:

	$
Professional sales staff commissions	$126,000
Amortization on office space	6,000
Selling supplies	9,600
Customer relations	12,900
Training expenses	9,000
Utilities	2,100
Total cost for refrigerators	165,600

(C) Calculation of total cost of the sales support for refrigerators:

	$
Professional sales staff commissions	$126,000
Selling supplies	9,600
Customer relations	12,900
Total cost of sales support for refrigerators	148,500