O'Neill, Incorporated's Segmented Income Statement for the Most Recent Month

question 219

Multiple Choice

O'Neill, Incorporated's segmented income statement for the most recent month is given below. For each of the following questions, refer back to the above original data. Currently the sales clerks receive a salary of $7,000 per month in StoreB. A proposal has been made to change from a fixed salary to a sales commission of 5%. Assume that this proposal is adopted, and that as a result sales increase by $20,000. The new segment margin for Store B should be:

• A)$29,000
• B)$32,000
• C)$45,000

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Definitions:

Commission Charges

Fees that are paid to an agent or company for facilitating a transaction, often calculated as a percentage of the transaction value.

Total Cost

The full amount of expenses incurred for producing or acquiring a product or service.

Commission Charges

Fees paid to an agent or company for facilitating a transaction, often a percentage of the transaction value.

Proceeds

The amount that a seller receives from the buyer of a note being discounted; the difference between the maturity value and the discount amount. In a stock transaction, the proceeds received by the seller are equal to the selling price minus the commission.