Question

For February, sales revenue is $597,000, sales commissions are 6% of sales, the sales manager's salary is $81,100, advertising expenses are $92,500, shipping expenses total 4% of sale, and miscellaneous selling expenses are $2,400 plus 1/2 of 1% of sales. Total selling expenses for the month of February are

a.$235,700

b.$238,685

c.$176,000

d.$211,820

Answer 1

Here, the items falling under selling expenses are sales commission, sales managers salary, advertising expenses, shipping expenses and other miscellaneous selling expenses.

ITEMS	AMOUNT $
Sales commission	35,820
Sales managers salary	81,100
Advertising expense	92,500
Shipping expense	23,880
Miscellaneous selling expense	5,385
TOTAL SELLING EXPENSE	238,685

Total sales revenue = $ 597,000.

Sales commission = 597,000 x 6%

Sales commission = $ 35,820.

Shipping expenses = 597,000 x 4%

Shipping expenses = $ 23,880

Miscellaneous expense = 2,400 + [(1/2) x 597,000 x 1%]

Miscellaneous expense = 2,400 + 2,985

Miscellaneous expense = $ 5,385.

Total selling expense = $ 238,685.

Hence, option B is the correct answer.

SUMMARY:

Selling expenses are the expenses incurred for promote and cost incurred to market products to customers. Here, total selling expense is calculated as $ 238,685.

Hence, option B is the correct answer.