The Least Likely Administrative Problem Encountered Under the Straight Commission

question 16

Multiple Choice

The least likely administrative problem encountered under the straight commission method of compensating salespeople is:

• A)Dividing the commission when three sales reps are involved in the sale.
• B)Establishing the rate of commission.
• C)Determining the commission payments on installment sales.
• D)Controlling the ratio of selling expenses to net sales.
• E)Handling situations involving a drawing account.

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Definitions:

Job-Order Costing

An accounting method where costs are assigned to specific jobs or batches, used in situations where products are distinctly different.

Selling Price

The amount of money charged for a product or service, determined by considering costs, market demand, competition, and profitability.

Unit Product Costs

The calculated cost assigned to a single unit of product, typically including direct materials, direct labor, and allocated overhead.

Markup

Markup refers to the amount added to the cost price of goods to cover overhead and profit, calculated as a percentage of the cost.