Answer:
The correct answer is A.
Explanation:
<u>First, we need to separate the fixed from the variable components:</u>
Fixed costs:
Advertising expenses 20,000
Office expenses 12,000
Miscellaneous expenses 10,000
Variable costs:
Delivery expenses $25,000
Commission expenses 75,000
Miscellaneous expenses 20,000
Total $120,000
N<u>ow, the proportion of variable costs to sales:</u>
Total selling expense proportion= 120,000/2,500,000= 0.048
For each variable cost:
Delivery expenses= 25,000/120,000= 0.20
Commission expenses= 75,000/120,000= 0.63
Miscellaneous expenses= 20,000/120,000= 0.17
<u>Finally, for $3,400,000 sales:</u>
Total variable cost= 3,400,000*0.048= $163,200
Comissions= 0.63*163,200= $102,816
