Duncan Enterprises Is Considering Building a New Plant in Canada

question 24

Multiple Choice

Duncan Enterprises is considering building a new plant in Canada.They predict sales at the new plant to be 50,000 units at $10.00/unit.Below is a listing of estimated expenses: $$\begin{array} { | l | c | c | } \hline \text { Category } & \begin{array} { c } \text { Total Annual } \\\text { Expenses }\end{array} & \begin{array} { c } \text { \% of Annual Expense } \\\text { that are Fixed }\end{array} \\\hline \text { Materials } & \$ 50,000 & 10 \% \\\hline \text { Labor } & \$ 90,000 & 20 \% \\\hline \text { Overhead } & \$ 40,000 & 30 \% \\\hline \text { Marketing/Admin } & \$ 20,000 & 50 \% \\\hline\end{array}$$ A Canadian firm was contracted to sell the product and will receive a commission of 20% of the sales price.No U.S.home office expenses will be allocated to the new facility.
How much does the Canadian contractor expect to make in commissions?

• A)$ 50,000
• B)$ 10,000
• C)$100,000
• D)$400,000

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Definitions:

Top Management

The highest-ranking executives in an organization, responsible for setting strategic goals and ensuring their execution.

Stakeholder Representatives

Individuals who act on behalf of specific groups interested in or affected by the outcome of a project or decision.

Corporate Governance

The structures, policies, and practices in place within an organization to ensure accountability, fairness, and transparency in the company's relationship with its stakeholders.

Inside Directors

Board members who are also employees, officers, or stakeholders in the company, providing them with detailed knowledge of its business operations.