What would the company's total selling expenses be for the month of Marchin the example below?
Sales revenue is $1,000,000; sales commissions are 4% of sales; the sales manager's salary is $80,000; advertising expenses are $75,000; shipping expenses total 1% of sales; and miscellaneous selling expenses are $2,100 plus 1% of sales.
The sales revenue is given to be $1,000,000.To calculate the total selling expenses we need to calculate each of the components that make up the selling expenses as given in the problem and add them up.
We have the selling expenses given as:
- Sales commissions are at 4% of revenue: 0.04*1000000 = $40000
- Sales manager's salary: $80000
- Advertising expenses: $75000
- Shipping expenses: 0.01*1000000 = $10000
- Miscellaneous selling expenses: $2100 + 1% of revenue = $2100 + $10000 = $12100
Adding up the selling expenses we get $ 217,100.
If you have entered all of the information properly, the total selling expenses for the month should be $217,100.
According to the link below, the way to find total selling expenses is to find all of the expenses that are linked to the sale of the firm's products. As the link says:
Selling expenses include any expense incurred in an attempt to sell the products. Expenses such as advertising, salaries of sales personnel, and sales commissions would be included.
Given this definition, you would need to add
- Sales commissions of $40,000. This is the product of 1,000,000 times .04 in commissions.
- The sales manager's salary of $80,000.
- The $75,000 of advertising.
- Shipping costs of $10,000. This is the product of 1,000,000 in sales times .01 in shipping costs.
- $2,100 in miscellaneous selling expenses.
- $10,000 (a further .01 of $1,000,000) in further selling expenses.
All of these added together make $217,100.