Nerrod Company Sells Its Products at $500 Per Unit, Net

question 71

Multiple Choice

Nerrod Company sells its products at $500 per unit, net 30. The firm's gross margin ratio is 40 percent. The firm has estimated the following operating costs:What is Nerrod's total sales-sustaining cost applicable to XBT as a customer?

• A)$0.
• B)$920.
• C)$4,120.
• D)$6,300.
• E)$6,420.

---

Definitions:

Payroll Tax Expense

Payroll tax expense includes taxes imposed on employers or employees, and is based on the wages, salaries, and tips paid to the employees.

State Unemployment Taxes

Taxes imposed by state governments on employers to fund unemployment insurance benefits for laid-off workers.

Hourly Wage Rate

The amount of money paid for each hour of work performed.

Federal Income Tax Withholding

Federal income tax withholding is the process by which an employer deducts a portion of an employee's income to pay directly to the federal government as a prepaid credit towards the employee’s annual tax liability.