The Following Details Have Been Extracted from the Budget of a Merchandiser

question 87

Multiple Choice

The following details have been extracted from the budget of a merchandiser. $$\begin{array} { | l | l | } \hline \text { Rent Expense } & \$ 8,000 \text { per month } \\\hline \text { Depreciation Expense } & \$ 3,500 \text { per month } \\\hline \text { Insurance Expense } & \$ 1,250 \text { per month } \\\hline \text { Miscellaneous Expense } & 2 \% \text { of sales, paid as incurred } \\\hline \text { Commissions Expense } & 10 \% \text { of sales } \\\hline \text { Salaries Expense } & \$ 7,000 \text { per month } \\\hline\end{array}$$ $$\begin{array} { | l | c | c | c | } \hline \text { Dec } & \text { Jan } & \text { Feb } & \text { March } \\\hline \text { Sales } \$ 45,000 & \$ 50,000 & \$ 65,000 & \$ 80,000 \\\hline\end{array}$$ Commission and salaries expenses are paid 50% in the month to which they relate and the balance in the next month.
Rent and miscellaneous expenses are paid as and when they occur. Insurance is prepaid at the beginning of the quarter. Calculate cash payments for the selling and administrative expenses for the first quarter of the next year.

• A) $70,400
• B) $50,500
• C) $75,000
• D) $62,750

Compare and contrast piece rates and commissions, understanding their application and effectiveness in motivating employees.

Evaluate the initiative required in different types of sales roles and the importance of sales strategy and planning.

Assess the risks and benefits associated with employee participation in company stock plans.

Understand the limitations and considerations in implementing piece rate plans within a team or individual-focused production environment.

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Definitions:

Lease Financing

Lease financing refers to the use of a lease agreement to allow the lessee to use an asset without purchasing it, while the lessor retains ownership.

Xerox

A multinational corporation known for its document technology and digital print solutions, often used synonymously with photocopying.

IBM

A multinational technology and consulting company known for its hardware, software, and extensive range of computing services.

Synthetic Lease

A financing method allowing a company to lease an asset while keeping it off its balance sheet, ensuring both tax advantages and off-balance-sheet financing.