is sales commission a fixed or variable cost
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Why are sales commissions a variable cost? Sales commission is a variable cost because the amount of the account is subject to variation. Think about it: A used car salesman is paid a commission say of $500 for every car he sells for the month of October. If he sells only 2 cars, then the sales commission is $1000, If he sells a whopping 12 cars, then the sales commission is $6000!!
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- Subtract these expenses from total sales to calculate the contribution margin. For example, suppose Company ABC had $100,000 in total sales in December, 2015. Variable expenses were: cost of goods sold - $30,000; sales commissions – 20,000; delivery expenses - $10,000.
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Why are sales commissions a variable cost? Sales commission is a variable cost because the amount of the account is subject to variation. Think about it: A used car salesman is paid a commission say of $500 for eve … ry car he sells for the month of October. If he sells only 2 cars, then the sales commission is $1000, If he sells a whopping 12 cars, then the sales commission is $6000!!
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Colors and Color Guards The Stars and Stripes as we now know it was born on 14 June 1777. The flags carried by Color-bearing units are called the national and organizational colors. The Colors may be carried in any formation in which two or more company honor guards or representative elements of a command participate.
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Understanding the Variable Rate Commission in a Real Estate Transaction The next discussion may be in regards to what commission the agent will charge the seller if the agent is the one who brings the buyer. This is where the dual or variable rate commission comes into play. As with all real estate commissions and fees, they are negotiable.
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- Fixed expenses are  $1,133,000 per month. The company is currently selling 9,000 units per month. Management is considering using a new component that would increase the unit variable cost by $7. Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 500 units.
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- Variable cost is an expense that changes in relation to a company s business activity. As opposed to fixed costs, which remain constant, these costs arise in direct proportion to a business s output, increasing and decreasing along with the volume of production.Most often, variable rates are associated with production and packaging materials, as well as some hourly wage labor expenses.s opposed to fixed costs, which remain constant, these costs arise in direct proportion to a business s output, increasing and decreasing along with the volume of production. Most often, variable rates are associated with production and packaging materials, as well as some hourly wage labor expenses.
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- The variable cost per unit equals $15. Fixed costs are equal to $700,000 for a year. Subtract the variable cost per unit of $15 from the $40 price, leaving $25. Divide fixed costs by $25 and you have a breakeven sales volume of 28,000 units.
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Is Labor a Fixed or Variable Cost? Variable costs are all the costs for a business that vary depending on production levels. Fixed costs and variable costs are mutually exclusive, meaning that a cost cannot be both fixed and variable. There can, however, be fixed and variable components of a cost, as is the case with labor costs.
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Variable Costing Versus Absorption Costing: Fixed manufacturing cost is not treated as a product costs under variable costing. Rather, fixed manufacturing cost is treated as a period cost and, like selling and administrative expenses, it is charged off in its entirety against revenue each period.
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- Fixed expenses are $1,133,000 per month. The company is currently selling 9,000 units per month. Management is considering using a new component that would increase the unit variable cost by $7. Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 500 units.
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Is a direct labor rate a variable cost or a fixed cost? Rating Newest Oldest. Best Answer: Labor is always a variable cost, even if it is contracted labor. Fixed cost is defined as any expenses you would still have if you shut everything down. For example, if a factory shuts down, they would still have payments on their equipment. Variable costs are costs that increase or decrease with production. So labor, raw materials, etc are variable costs.
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What is the difference between direct costs and variable costs? As the production level of the devices decreases, the variable costs decrease as well. Although these variable costs are direct costs, variable costs do not need to be directly related to the product. Unlike a direct cost, a variable cost does not have to be easily traceable to a cost object. A variable cost can also be an indirect cost.
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- The $10 per unit would equal the Division's variable costs ($5 + 2 + 3 = $10), so the contribution margin per unit is zero. Thus, only the 8,000 units of external sales would generate a contribution margin of $80,000 (8,000  $10) to cover fixed costs of $90,000 (10,000  $9).
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- Variable cost related to production & selling is Rs. 150 per unit and fixed cost is Rs. 5,000. If the management wants to increase sales price by 10%, what will be increasing sales profit of company by increasing unit sales price.
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- The variable cost per unit equals $15. Fixed costs are equal to $700,000 for a year. Subtract the variable cost per unit of $15 from the $40 price, leaving $25. Divide fixed costs by $25 and you have a breakeven sales volume of 28,000 units.ubtract the variable cost per unit of $15 from the $40 price, leaving $25. Divide fixed costs by $25 and you have a breakeven sales volume of 28,000 units.
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- Along with variable costs, fixed costs make up one of the two components of total cost: total cost is equal to fixed costs plus variable costs. In economics, fixed costs, indirect costs or overheads are business expenses that are not dependent on the level of goods or services produced by the business.They tend to be time-related, such as salaries or rents being paid per month, and are often referred to as overhead costs.his is in contrast to variable costs, which are volume-related (and are paid per quantity produced). In management accounting, fixed costs are defined as expenses that do not change as a function of the activity of a business, within the relevant period.
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- Fixed costs are those that do not change as the level of output changes. Variable costs are those costs that change as output changes. Fixed costs can be quite large. In the airline industry, for example, fixed costs range from 40 to 70 percent of total costs.n our widget example, we will assume that the fixed cost for the stapler, pen, and “factory” is $10 and the cost of each worker hired is $5 per worker. Since fixed costs are constant, the firm incurs $10 regardless of the level of output. Labor is the only variable cost computed by $5 times the number of workers.
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Variable Cost Cutting Strategies That Are Proven to Increase Profits Fixed and Variable Cost Control. There are two types of costs in business - fixed costs and variable costs. Fixed costs are those that are not related to the amount of sales or production. They usually include rent, insurance, and the costs incurred by the utilities in use, or for running the business, such as salaries, advertising etc.
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Fixed and Variable Costs Variable Costs. Within the relevant range and specified time period, the total amount of variable costs varies directly (in proportion) to change in activity level. The cost per unit is constant. For example: ABC Company spends $2.50 materials cost for every unit of Product A. If the company produces 1,000 units, it spends $2,500 ($2.50 x 1,000).
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Variable cost Variable costs are costs that change in proportion to the good or service that a business produces. Variable costs are also the sum of marginal costs over all units produced. They can also be considered normal costs. Fixed costs and variable costs make up the two components of total cost.Direct costs, however, are costs that can easily be associated with a particular cost object. However, not all variable costs are direct costs.hey can also be considered normal costs. Fixed costs and variable costs make up the two components of total cost. Direct costs, however, are costs that can easily be associated with a particular cost object.
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Is depreciation expense a fixed cost or a variable cost? Fixed costs are such costs that do not change with the change in activity level (e.g. units produced) with in the relevant range. Where relevant range can be defined in terms of time or activity level. Variable costs are such costs that change with the change in activity level (e.g. units produced).
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Variable vs Fixed Costs Fixed costs remain constant regardless of activity or production volume. In accounting, all costs can be described as either fixed costs or variable costs. Variable costs are inventoriable costs – they are allocated to units of production and recorded in inventory accounts, such as cost of goods sold. Fixed costs, on the other hand, are all costs that are not inventoriable costs. All costs that do not fluctuate directly with production volume are fixed costs.
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Saturday Night Live  (season 35) The season was accompanied by three prime-time episodes of Saturday Night Live Weekend Update Thursday and three prime-time SNL clip shows. Prior to the start of the season, many cast changes occurred. Darrell Hammond, the last cast member from the 1990s, left the show after a record 14 seasons in the cast.
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- Subtract the variable cost per unit of $15 from the $40 price, leaving $25. Divide fixed costs by $25 and you have a breakeven sales volume of 28,000 units.
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Demand a Variable Rate Commission and Avoid a âHoggerâ Demand a Variable Rate Commission and Avoid a “Hogger”. In the Twin Cities real estate market, most sales transactions involve two agents – the listing agent, who represents the seller, and the selling agent, who represents the buyer.