Question

Choose the method of pay that would result in the most earnings for one month on sales of $60,000.

a. Straight commission of 6% on all sales.
b. Monthly salary of $1,500 plus 3% commission on all sales.
c. Graduated commission of 4% on the first $50,000 in sales and 10% on anything over that.
d. Graduated commission of 5% on the first $40,000 in sales and 9% on anything over that.

Answer 1

A.$3,600
B.$3,300
C.$3,000
D.$3,800
The answer is D.

Answer 2

a) 6% of 60000 = $3,600
b) 1500 + .03(60000) = 1500 + 1800 = $3,300
c) 4% of 50000 = .04 x 50000 = 2000
Then 10% of the remaining $10,000 ($60,000-$50000) = (.1x10000) = 1000. Together you'd have $3,000
d) 5 % of 40,000 .05 x 40000= 2000
Then .09 of the remaining 20.000 (60,000-40,000) = ,09 x 20000 = 1800
2000 + 1800 = $3,800
Answer d. provides the greatest earnings.