Alum Corporation sells its product at $30 per unit. Unit variable cost is $22 and total fixed costs total to $100,000 per month. The company currently pays salaries of $40,000 per month but with no commission. It is considering a compensation plan whereby the sales people would receive 5% commission based on sales, but their salaries would be decreased to $25,000 per month. At what sales level is the company indifferent between the two compensation plans?

 

3. Solo Company uses a standard cost system in accounting for the cost of its only product. The standard cost per unit (based on 10,000 units production) was set up as follows: Direct materials, 10 kgs at $11/kg.; Direct labor, 8 hours at $50 per hour; Faċtory overhead, 8 hours at $15 per hour. The following information on the operations appear in the company's record for the month of July: Units completed during the month; 8,000 units; units in process at the end of the month, with 100% materials but half completed, 1,000 units; Direct materials used, 95,000 kgs at $10 per kg; Direct labor, $3,510,000 at a rate of $54; Actual overhead for the month $985,000. What is the variable efficiency variance?

Answer rating: 100% (QA)

Under the current compensation plan the companys total fixed costs are 100000 per month and the salespeople are paid a salary of 40000 per month The c... View the full answer