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

question 62

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 operating income next month?

• A) $2,700.
• B) $5,100.
• C) $7,500.
• D) $11,200.