1C1B THE MARKETING MANAGER OF AMES COMPANY HAS LEARNED THE FOLLOWING...

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.