Final answer:
Morgan Lee earns a commission of 3% on the first $100,000 and 5% on any sales above that. For monthly sales of $120,000, this equates to a $3,000 commission on the first $100,000 and a $1,000 commission on the remaining $20,000, totalling a $4,000 commission.
Step-by-step explanation:
To calculate Morgan Lee's commission on monthly sales of $120,000, we need to split the sales into two parts: the first $100,000, and the amount above $100,000. The first part earns a commission of 3%, and the second part earns a commission of 5%.
For the first $100,000, the commission is 3% of $100,000, which is $(100,000 * 0.03) = $3,000.
For the remaining $20,000 (since $120,000 - $100,000 = $20,000), the commission is 5% of $20,000, which is $(20,000 * 0.05) = $1,000.
Therefore, the total commission earned by Morgan Lee is $3,000 + $1,000 = $4,000.
The correct answer is A. $4,000.