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Q.1. The King Air Freshener Company of Waco, Texas, markets a single product in Waco and Dallas. Marketing expenses for the past year were: Sales

Q.1. The King Air Freshener Company of Waco, Texas, markets a single product in Waco and Dallas. Marketing expenses for the past year were:

Sales salaries

$75,000

Salespersons expenses

21,500

Advertising

24,000

Delivery expense

30,000

Credit investigation expense

7,000

Collection expense

12,000

Total

169,500

Additional information:

  1. The company has five salespersons, three in Dallas and two in Waco, and each is paid the same salary.
  2. The salespersons receive equal allowances for expenses, except that the Dallas salespersons each receive $500 per year extra for turnpike toll fees.
  3. All advertising is placed according to the number of subscribers to the Waco and Dallas daily newspapers, 150,000 and 450,000 respectively.
  4. Delivery is made by an outside agency which charges a flat annual fee. The agency made 5,000 deliveries (3,000 in Dallas, 2,000 in Waco) from a centrally located warehouse.
  5. 700 new customers were obtained (400 from Dallas, 300 from Waco).
  6. 6,000 customers remittances were received (4,500 from Dallas, 1,500 from Waco).

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