152. CSO: 1C1a LOS: 1C1b
The marketing manager of Ames Company has learned the following about a new
product that is being introduced by Ames. Sales of this product are planned at $100,000
for the first year. Sales commission expense is budgeted at 8% of sales plus the
marketing manager's incentive budgeted at an additional ½%. The preparation of a
product brochure will require 20 hours of marketing salaried staff time at an average rate
of $100 per hour, and 10 hours, at $150 per hour, for an outside illustrator's effort. The
variable marketing cost for this new product will be
a. $8,000.
b. $8,500.
c. $10,000.
d. $10,500.
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