Question

DC Construction has two divisions: Remodeling and New Home Construction. Each division has an on-site supervisor who is paid a salary of $66,500 annually and one salaried estimator who is paid $50,000 annually. The corporate office has two office administrative assistants who are paid salaries of $61,750 and $46,750 annually.

The president's salary is $169,500. How much of these salaries are common fixed expenses?

a.$169,500

b.$278,000

c.$108,500

d.$330,500

Answer 1

b. $278,000

Step-by-step explanation:

A fixed cost that supports the functions of more than one segment of the business but it is not directly attributable to any specific segment.

The Salary of office administrative assistants and President's salary is a common fixed cost because they perform for the multiple segment of the business and Not Directly attributable to any single segment. Whereas Site Supervisor and Estimator are working on a specific project / segment. So their cost will be project's fixed cost.

Common fixed Expense = office administrative assistant's Salary + President's Salary = $61750 + $46,750 + $169,500 = $278,000

Answer 2

Correct option is B.

$278,000

Step-by-step explanation:

Common Fixed Expenses = Office Administrative Assistant + Office Administrative Assistant + President's Salary

Common Fixed Expenses = $61,750 + $46,750 + $169,500

Common Fixed Expenses = $278,000