Use the Information Below to Answer the Following Question(s)

question 160

Multiple Choice

Use the information below to answer the following question(s) .
Veron Corporation is considering building a new plant in Europe. They predict sales at the new plant to be 100,000 units at $4.00/unit. Below is a listing of estimated expenses:

A European firm was contracted to sell the product and will receive a commission of 13% of the sales price. No U.S. home office expenses will be allocated to the new facility.
-How much does the European contractor expect to make in commissions?

• A) $40,000
• B) $52,000
• C) $80,000
• D) $13,000

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Definitions:

Credit

Refers to the provision of goods or services with the expectation of future payment, or an accounting entry that increases liabilities or decreases assets.

Asset Accounts

Accounts on a balance sheet representing owned resources expected to provide future economic benefits.

Expense Accounts

Accounts used to record all expenditures incurred by a business during an accounting period, excluding costs of goods sold.

Debits

An accounting entry that results in either an increase in assets or a decrease in liabilities on a company's balance sheet or in an expense on the income statement.