Question

The sales staff of Central Media (a locally owned radio and cable television station) consists of two salespeople, Derek and Lawanna. During March, the following salaries and commissions were paid: Derek Lawanna Salaries $23,100 $29,100 Commissions 6,300 1,000 Derek spends 100% of his time selling advertising. Lawanna spends two-thirds of her time selling advertising and the remaining one-third on administrative work. Commissions are paid only on sales. Required: 1. Accumulate these costs by account by filling in the table provided. 2. Assign the costs of salaries and commissions to selling expense and administrative expense by filling in the table provided.

Answer 1

1) Accumulation of costs by Account is shown as follows:- (Amounts in $)

Cost	Salaries	Commissions
Derek	23,100	6,300
Lawanna	29,100	1,000
Total	52,200	7,300

2) Assignment of cost to selling and administrative expense (Amounts in $)

Costs	Selling Costs	Administrative Costs
Derek's Salary (wholly to selling)	23,100	-
Lawanna's Salary (2/3 to selling and 1/3 to Administrative)	19,400	9,700
Derek's Commission (Only Selling)	6,300	-
Lawanna's Commission (Only Selling)	1,000	-
Total Costs	49,800	9,700

As Derek spends 100% of his time selling advertising, his whole salary is a part of selling cost.

Lawanna spends 2/3rd of his time selling advertising and remaining 1/3rd for administrative work, therefore his salary's 2/3rd is part of selling cost and remaining 1/3rd is the part of administrative cost.

As commission is paid on sales, the whole commission expense is the part of selling cost.