Gasson Company Is a Merchandising Firm Assume That All Activity Mentioned in This Problem Is Within

question 71

Multiple Choice

Gasson Company is a merchandising firm. Next month, the company expects to sell 800 units. The following data describe the company's revenue and cost structure: $\begin{array} { | l | r | } \hline \text { Selling price per unit } & \$ 40 \\\hline \text { Sales commission } & 5 \% \\\hline \text { Purchase price (cost) per unit } & \$ 18 \\\hline \text { Advertising expense } & \$ 4,000 \text { per month } \\\hline \text { Administrative expense } & \$ 4,500 \text { per month plus } 15 \% \text { of sales } \\\hline\end{array}$ Assume that all activity mentioned in this problem is within the relevant range.


-What is the expected total administrative expense next month?

• A) $4,800.
• B) $9,300.
• C) $13,300.
• D) $14,900.

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Definitions:

Infant

A very young child or baby, typically from birth to one year of age, who is in the earliest stages of development.

Mongolian Spot

A benign, blue-gray birthmark, often appearing on the skin of the lower back and buttocks of infants, more common in those of Asian or African descent.

African American

An ethnic group of Americans with total or partial ancestry from any of the black racial groups of Africa.

Benign

A term used to describe conditions, tumors, or growths that are not cancerous and are unlikely to be harmful.