Question

Norman Company pays a sales commission of 5% on each unit sold. If a graph is prepared, with the vertical axis representing per-unit cost and the horizontal axis representing units sold, how would a line that depicts sales commissions be drawn?

A. As a straight diagonal line, sloping upward to the right.
B. As a straight diagonal line, sloping downward to the right.
C. As a horizontal line.
D. As a vertical line.
E. As a curvilinear line.

Answer 1

The sales commission for the Norman Company on a graph would be shown as a straight horizontal line, as the commission is a fixed percentage and remains constant per unit sold. The correct option is C.

Step-by-step explanation:

The Norman Company pays a sales commission of 5% on each unit sold. When graphing this on a sales commission chart with the vertical axis representing per-unit cost and the horizontal axis representing units sold, the line representing the sales commission would be a straight horizontal line. This is because the commission per unit is a fixed percentage of the sales price, so for each unit sold, the commission stays the same, indicating no change in the commission amount as the number of units sold increases.

The line that depicts sales commissions would be a straight diagonal line, sloping upward to the right.

As the number of units sold increases, the sales commission would also increase. Since the commission is a percentage of the unit price, which is represented on the vertical axis, the line would slope upward.

For example, if the per-unit cost is $100, and the company pays a 5% commission on each unit sold, the commission would be $5. If the per-unit cost increases to $200, the commission would be $10, and so on.