Q 2: Huzaifas Toys produces lucrative toys for kids. Sales personnel are paid a substantial commission on each unit of toys sold plus small basic salary, in order to encourage them to be aggressive in their sales efforts.

	PER UNIT	Monthly Fixed Expenses:
Selling price	$40
Variable costs:		Advertising	$40,000
Material costs	$17	Rent	$25,000
Sales commission	$5.5	Salaries	$130,000

Required:

1. The management is planning to give sales commission based on sales revenue only, not cm per unit, suppose the company has 2 different products and both of them have different price ,vc and cm. Will this decision be wise? Comment on the decision. [ 3 Marks ]