Question

Chris can be paid in one of two ways. Plan A is a salary of $340 per month, plus commission of 8% sales. Plan B is a salary of $538 per month, plus a commission of 5% of sales. For what amount of sales is Chris better off selecting plan A?

a) $3,750
b) $4,000
c) $4,250
d) $4,500

Answer 1

By comparing the total earnings for each plan, Chris is better off selecting Plan A if sales are less than $6,600. All the given options (a) $3,750, (b) $4,000, (c) $4,250, and (d) $4,500 are less than $6,600, meaning Plan A is more beneficial.

Step-by-step explanation:

To determine for what amount of sales Chris is better off selecting Plan A, we need to set up equations representing the total earnings for each plan and find the sales amount where both plans yield the same earnings. We'll then be able to see for which sales amounts Plan A is more beneficial.

Let's define S as the amount of sales. Plan A's earnings can be calculated with the equation 340 + 0.08S, and Plan B's earnings with 538 + 0.05S.

We want to find the point at which 340 + 0.08S equals 538 + 0.05S. Solving for S gives us:

340 + 0.08S = 538 + 0.05S
0.08S - 0.05S = 538 - 340
0.03S = 198
S = 198 / 0.03
S = $6,600

Therefore, for sales amounts less than $6,600, Plan A is more beneficial, and for sales amounts greater than $6,600, Plan B is more beneficial.

From the given options (a) $3,750, (b) $4,000, (c) $4,250, (d) $4,500, all are less than $6,600, meaning Chris is better off selecting Plan A for any of those sales amounts.