Reference: 06-02
Comparative Income Statements for Boggs Sports Equipment Company

Multiple Choice

Reference: 06-02
Comparative income statements for Boggs Sports Equipment Company for the last two months are presented below: $$\begin{array} { | l | l | l | } \hline & \text { July } & \text { August } \\\hline \text { Sales in Units } & 11,000 & 10,000 \\\hline & & \\\hline \text { Sales Revenue } & \$ 165,000 & \$ 150,000 \\\hline \text { Less Cost of Goods Sold } & 72,600 & 66,000 \\\hline \text { Gross Margin } & 92,400 & 84,000 \\\hline \text { Less Operating Expenses: } & & \\\hline \text { Rent } & 12,000 & 12,000 \\\hline \text { Sales Commissions } & 13,200 & 12,000 \\\hline \text { Maintenance Expenses } & 13,500 & 13,000 \\\hline \text { Clerical Expense } & 16,000 & 15,000 \\\hline \text { Total Operating Expenses } & 54,700 & 52,000 \\\hline \text { Net income } & \$ 37,700 & \$ 32,000 \\\hline\end{array}$$ All of the company's costs are either fixed, variable, or a mixture of the two (i.e., mixed) . The company is a merchandising company. Assume that the relevant range includes all of the activity levels mentioned in this problem.
-Which of the operating expenses of the company is variable

A) Clerical Expense.
B) Maintenance Expense.
C) Rent.
D) Sales Commissions.