Question

Ron is offered a sales job directly out of college. He has a choice as to how he will recive his salary the first year. Salary Plan 1: He would receive a base pay of $2000 per month plus a 3% commission on each sale. Salary Plan 2: No base pay but a 6% commission on each sale. Suppose Ron's salary goal for the year is $50,000. If the aerage sale in his company is $60,000, how many sales would Ron have to make over the course of the year too meet his goal under each plan?

Answer 1

Plan 1: 15

Plan 2: 14

Explanation:

Let Ron have to make x numbers of sales of average value $60000, to achieve his target of $ 50000 salary per year in plan 1.

Plan 1 gives a 3% commission on each sale plus $2000 per month.

So,
`2000 * 12 + 60000 * (3x)/(100) = 50000`

⇒ 1800x = 26000

⇒ x = 14.44

So, the number of sale must be at least 15. (Answer)

Let Ron have to make x numbers of sale of average value $60000, to achieve his target of $ 50000 salary per year in plan 2.

Plan 2 gives a 6% commission on each sale but no base pay.

Therefore,

`(6x)/(100) * 60000 = 50000`

⇒ x = 13.89

So, he has to make at least 14 sales. (Answer)