Question

JJ Motors Inc. employs 45 sales personnel to market their line of luxury automobiles. The average car sells for $23,000, and a 6 percent commission is paid to the salesperson. JJ Motors is considering a change to the commission arrangement where the company would pay each salesperson a salary of $2,000 per month plus a commission of 2 percent of the sales made by that salesperson. The amount of total monthly car sales at which JJ Motors would be indifferent as to which plan to select is

Answer 1

Answer:

$2,250,000

Explanation:

JJ Motors Inc

Salesperson salary per months $2,000 ×45 Sales personnel

=$90,000

6 percent commission -Commission of 2 percent made from sales

=4%

Total revenue =$90,000/0.04

=$2,250,000