Question

Salary expense was 15.5% of sales this year. If sales this year are $1,300,000 and are forecasted to be $1,400,000 next year, what is forecasted salary expense next year if all expenses maintain a constant percent of sales

Answer 1

$217,000

Step-by-step explanation:

With regards to the above information, we can compute the forecasted salary expense next year by;

If salary expense is 15.5% of sales, then salary expense this year would be;

= 15.5% × $1,300,000

= $201,500

Salary expense next year would be

= 15.5% of forecasted sales next year

= 15.5% × $1,400,000

= $217,000

Forecasted salary expense next year would be $217,000 if all expenses maintain a constant percent of sales