Which Scenario Would Be Appropriate for Using a Salary-Only Plan

question 38

Multiple Choice

Which scenario would be appropriate for using a salary-only plan?

• A)The salesperson is selling high-priced products
• B)The salesperson has substantial influence over sales
• C)The company wants to save money due to budget constraints
• D)The company wants to create competition among its sales staff

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Definitions:

Variable Manufacturing Overhead

Costs in manufacturing that vary with the level of production output, such as utilities and certain labor costs; they do not remain constant as production levels fluctuate.

Fixed Manufacturing Overhead

Represents the indirect costs associated with manufacturing that do not vary with the level of production, such as factory rent, salaries of factory supervisors, and depreciation of factory equipment.

Machine-Hours

A unit of measure representing the operating time of machines used in the production of goods.

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate manufacturing overhead costs to products based on a specific activity base.