Fay Corp. pays its outside salespersons fixed monthly salaries and commissions on net sales. Sales commissions are computed and paid on a monthly basis (in the month following the month of sale), and the fixed salaries are treated as advances against commissions. However, if the fixed salaries for salespersons exceed their sales commissions earned for a month, such excess is not charged back to them. Pertinent data for the month of March 2006 for the three salespersons are as follows:
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|
Salesperson |
Fixed salary |
Net sales |
Commission rate |
|
A |
$10,000 |
$ 200,000 |
4% |
|
B |
14,000 |
400,000 |
6% |
|
C |
18,000 |
600,000 |
6% |
|
Totals |
$42,000 |
$1,200,000 |
What amount should Fay accrue for sales commissions payable at March 31, 2006?
- $70,000
- $68,000
- $28,000
- $26,000