Parker Company pays each member of its sales staff a salary as well as a commission on
each unit sold. For the coming year, Parker plans to increase ... Accounting MCQs | Accounting MCQs

Parker Company pays each member of its sales staff a salary as well as a commission on
each unit sold. For the coming year, Parker plans to increase all salaries by 5% and to keep
unchanged the commission paid on each unit sold. Because of increased demand, Parker
expects the volume of sales to increase by 10%. How will the total cost of sales salaries and
commissions change for the coming year?

Increase by 5% or less.Increase by more than 5% but less than 10%.Increase by 10%.Increase by more than 10%.Show Result

Correct - Your answer is correct.

Wrong - Your answer is wrong.

Detailed Answer

Answer (B) is correct.
Sales salaries will increase by exactly 5%. The per-unit commission
amount will remain constant, but sales commissions in total are expected
to increase by 10%. Thus, total sales salaries and commissions will
increase somewhere between 5% and 10%.