Answer: (a) His gross annual income is $54,180
(b) His gross monthly income is $4,515
Step-by-step explanation: If Steven works as a salesman and earns a commission of 5.25%, then his income shall be the agreed commission as a proportion of the total sales he records. In effect, what this means is that if Steven typically sells $86,000 worth of merchandise per month, then his gross monthly income shall be calculated as follows;
Commission = 5.25% x Total sales
Commission = 0.0525 x 86000
Commission = 4515
(b) His gross monthly income is therefore $4,515.00
Given that he works a full year (12 months) at his current job, his gross annual income shall be calculated as follows;
Commission = (5.25% x Total sales) x 12
Commission = 4515 x 12
Commission = 54180
(a) His gross annual income is therefore $54,180.00
Note that this is determined as his gross income due to the fact that deductions have not been factored into it. However, Steven would have to make deductions for, personal income tax, pension funds deductions, mortgages, and any other legally mandatory deductions. His after tax monthly income can only be derived if the tax rate is provided (however not available in this question).
Nonetheless, <u>assuming</u> the tax rate in Steven's state of residence is 7.5% , then his after-tax monthly income can be calculated as follows;
Monthly tax = 7.5% x 4515
Monthly tax = (7.5)/100 x 4515
Monthly tax = 0.075 x 4515
Monthly tax = 338.625
Net Income = Gross Monthly income - Monthly tax
Net Income = 4515 - 338.625
Net Income = 4176.375
**Note that the result of this calculation in option (c), is based on an assumed tax rate of 7.5%**
