Question

The earnings of two employees are given below: Employee A: 5% commission on all sales. Employee B: 3% commission on the first $70,000 and 9% commission on anything over $70,000. How much more does a graduated commission employee make over a straight commission employee for sales of $130,000? A. $500 B. $2,000 C. $1,100 D. $1,500

Answer 1

The graduated commission employee makes $1,000 more.

Explanation:

Sale of $130,000.

Employee A:

5% on all sales. So a commission of 5% of $130,000 which is: 0.05*130000 = $6,500.

Employee B:

3% commission on the first $70,000 and 9% commission on anything over $70,000.

So a commission fo 3% for the first $70,000 and 9% for $130,000 - $70,000 = $60,000. So

0.03*70000 + 0.09*60000 = $7,500

$7,500 - $6,500 = $1,000

The graduated commission employee makes $1,000 more.