For February, sales revenue is $700,000, sales commissions are 5% of sales, the sales manager's salary is $96,000, advertising expenses are $90,000, shipping expenses total 2% of sales, and miscellaneous selling expenses are $2,500 plus ½ of 1% of sales. Total selling expenses for the month of February are

Question

For February, sales revenue is $700,000, sales commissions are 5% of sales, the sales manager's salary is $96,000, advertising expenses are $90,000, shipping expenses total 2% of sales, and miscellaneous selling expenses are $2,500 plus ½ of 1% of sales. Total selling expenses for the month of February are

BlackTom AI · Accepted Answer

Compute each component of selling expenses based on the given percentages and fixed amounts, then sum them.

1. Relevant knowledge points and concepts
- Selling expenses include both variable items (percentages of sales) and fixed items (salaries, fixed advertising).
- Percentages of sales are converted to dollar amounts by multiplying the percentage by sales revenue.
- “½ of 1%” means 0.5% (i.e., 0.005 as a decimal).

2. Step-by-step reasoning and calculations
- Sales revenue for February = $700,000.
- Sales commissions = 5% of sales = 0.05 × $700,000.
  Intermediate: 0.05 × 700,000 = $35,000.
- Sales manager’s salary = $96,000 (fixed).
- Advertising expenses = $90,000 (fixed).
- Shipping expenses = 2% of sales = 0.02 × $700,000.
  Intermediate: 0.02 × 700,000 = $14,000.
- Miscellaneous selling expenses = $2,500 + (½ of 1% of sales).
  ½ of 1% = 0.005, so 0.005 × $700,000 = $3,500.
  Intermediate: Miscellaneous = $2,500 + $3,500 = $6,000.

3. All intermediate arithmetic shown
- Commissions: $35,000
- Manager salary: $96,000
- Advertising: $90,000
- Shipping: $14,000
- Miscellaneous: $6,000

4. Why the correct answer is correct
Summing all components: $35,000 + $96,000 + $90,000 + $14,000 + $6,000 = $241,000. Each term correctly applies the given rates and fixed amounts; the “½ of 1%” was converted properly to 0.005 of sales ($3,500) and added to the $2,500 base for miscellaneous.

5. Why the other options are incorrect
- $237,500: This equals the correct total minus $3,500, indicating someone omitted the 0.5% ($3,500) portion of miscellaneous.
- $235,000: This equals the correct total minus the entire miscellaneous $6,000, indicating omission of the whole miscellaneous amount.
- $161,000: Far too low; this would require omitting major fixed items (e.g., manager salary and advertising) or misapplying percentage calculations.

6. Conclusion
Total selling expenses for February = $241,000, which matches the provided correct answer.

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