A Salesperson's Bonus for This Year Is Based on Meeting

question 16

Multiple Choice

A salesperson's bonus for this year is based on meeting targets based on last year's sales.This year turns out to be an unusually good year.The salesperson is likely to:

• A)meet the target easily and push forward with all potential sales.
• B)fail to meet the last year's targets because of overconfidence.
• C)just be satisfied with meeting last year's target.
• D)defer some sales to the next fiscal year.

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Definitions:

Finished Goods

Completed products ready for sale or shipment to customers, found as an inventory category in the balance sheet.

Fixed Overhead

Refers to the total of all indirect costs that remain constant regardless of the level of production or business activity.

Absorption Costing

Absorption Costing is an accounting method that includes all of the manufacturing costs (direct materials, direct labor, and both variable and fixed manufacturing overhead) in the cost of a product.

Variable Overhead

Costs that fluctuate with production volume, such as utilities or materials used in production.