Question

Bill Rose is a salesperson for Boxes, Incorporated. He believes his $1,043.10 monthly paycheck is in error. Bill earns a $1,150 salary per month plus a 7% commission on sales over $1,500. Last month, Bill had $5,450 in sales. Bill believes his traveling expenses are 15% of his weekly gross earnings before commissions. Monthly deductions include Social Security, $88.44; Medicare, $20.68; FIT, $103.37; union dues, $25; and health insurance, $16.99.

1. Calculate Bill’s monthly take-home pay, and indicate the amount his check was under- or overstated.

Note: Round your answers to the nearest cent.

Answer 1

To calculate Bill's monthly take-home pay, we need to consider his salary, commission, traveling expenses, and deductions. His monthly take-home pay is $500.61, and his check was understated by $542.49.

Step-by-step explanation:

To calculate Bill's monthly take-home pay, we need to consider his salary, commission, traveling expenses, and deductions. First, let's calculate Bill's commission. He had $5,450 in sales last month, so his commission would be 7% of the sales over $1,500, which is $5,450 - $1,500 = $3,950. So his commission is 7% of $3,950, which is 0.07 * $3,950 = $276.50.

Next, let's calculate Bill's traveling expenses. His weekly gross earnings before commissions are his salary plus commission, so it would be $1,150 + $276.50 = $1,426.50. His traveling expenses are 15% of his weekly gross earnings, so it would be 0.15 * $1,426.50 = $213.98 per week.

To calculate Bill's monthly traveling expenses, we multiply his weekly traveling expenses by 52 weeks (assuming 52 weeks in a year), so it would be $213.98 * 52 / 12 = $925.89 per month.

Now let's calculate Bill's monthly take-home pay. His monthly gross earnings are his salary plus commission, so it would be $1,150 + $276.50 = $1,426.50. We subtract his traveling expenses from his monthly gross earnings to get his take-home pay, so it would be $1,426.50 - $925.89 = $500.61.

Finally, let's calculate the amount his check was under- or overstated. His expected monthly take-home pay is $1,043.10, so the difference is $1,043.10 - $500.61 = $542.49. Therefore, his check was understated by $542.49.