DC Construction has two divisions: Remodeling and New Home Construction. Each division has an on-site supervisor who is paid a salary of $62,000 annually and one salaried estimator who is paid $36,000 annually. The corporate office has two office administrative assistants who are paid salaries of $40,000 and $32,000 annually. The president's salary is $138,000. How much of these salaries are common fixed expenses?
A)$138,000
B)$210,000
C)$72,000
D)$258,000

Question

Quizplus · Accepted Answer

Fixed expenses are those that do not vary with the level of activity or number of units produced. In this case, salaries for on-site supervisors, estimators, administrative assistants, and the president are all fixed expenses that do not change with the amount of remodeling or new home construction work completed.

To calculate the total amount of common fixed expenses, we add up the salaries of all these employees:

(2 x $62,000) + (2 x $36,000) + $40,000 + $32,000 + $138,000 = $210,000

Therefore, the best choice is B, as $210,000 is the total amount of common fixed expenses for DC Construction.

DC Construction Has Two Divisions: Remodeling and New Home Construction