If a Firm Manager Has a Base Salary of $100,000

question 109

Multiple Choice

If a firm manager has a base salary of $100,000 and also receives 5 percent of all profits,what percentage of his/her final income will be from a profit-sharing plan when profit equals $1,500,000?

• A) 51 percent
• B) 27 percent
• C) 43 percent
• D) 48 percent

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Definitions:

Costs

Costs refer to the expenditures incurred by a business in the process of generating revenues.

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit.

Fixed Costs

Expenses that remain constant regardless of the amount of production or sales, including rent, wages, and insurance premiums.

Mixed Cost

A cost that contains both fixed and variable components and changes with the level of output but not directly in proportion.