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Stanley's Candies is considering building a new plant in Europe

Accounting

Stanley's Candies is considering building a new plant in Europe. It predicts sales at the new plant to be 40,000 units at $4.00/unit. Below is a listing of estimated expenses:

 

Category

Total Annual Expenses

% of Annual Expenses that are Fixed

Materials

$20,000

10%

Labor

$30,000

20%

Overhead

$50,000

40%

Marketing/Admin

$10,000

60%

 

A European firm was contracted to sell the product and will receive a commission of 10% of the sales price. No U.S. home office expenses will be allocated to the new facility.

 

How much does the European contractor expect to make in commissions?

A) $4,000

B) $32,000

C) $80,000

D) $16,000

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