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 half of a percent. 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.

Question

Quizplus · Accepted Answer

The variable marketing cost would include the 8% sales commission plus the half of a percent for the manager's incentive, 8.5% x $100,000 = $8,500.

The Marketing Manager of Ames Company Has Learned the Following