Question

. Choose the method of pay that would result in the most earnings for one month on sales of $73,620. A. Straight commission of 6% on all sales B. Monthly salary of $3,000 plus 2% commission on all sales C. Graduated commission of 4% on the first $50,000 in sales and 9% on anything over that D. Graduated commission of 5% on the first $35,000 in sales and 7% on anything over that

Answer 1

I just took the test, the answer is definitely B. :)

Answer 2

For option A: Earning = 0.06 x $73,620 = $4,417.20
For option B: Earning = $3,000 + 0.02 x $73,620 = $3,000 + $1,472.40 = $4,472.40
For option C: Earning = 0.04 x $50,000 + 0.09 x ($73,620 - $50,000) = $2,000 + 0.09 x $23,620 = $2,000 + $2,125.80 = $4,125.80
For option D: Earning = 0.05 x $35,000 + 0.07 x $(73,620 - 35,000) = $1,750 + 0.07 x $38,620 = $1,750 + $2,703.4 = $4,453.40

Therefore, the method that yeilds the most earning is monthly salary of $3,000 plus 2% commission on all sales .