Question

Chris can be paid in one of two ways. plan a is a salary of ​$360 per​ month, plus a commission of 9​% of sales. plan b is a salary of ​$630 per​ month, plus a commission of 4​% of sales. for what amount of sales is chris better off selecting plan​ a?

Answer 1

The correct answer is any amount higher than $5,400.

First, you need to solve the break even point of sales when Chris will earn the exact same amount by plan a or plan b. The following equation will solve this problem, with x being the amount of sales.

$360 + .09x = $630 + .04x

First, subtract .04x from both sides:

$360 +.05x = $630

Next, subtract $360 from both sides:

.05x = $270

Finally, divide both sides by .05:

X = $5,400

At $5,400 Chris will earn the same about of pay, regardless of which plan they are on. Since the commission percentage is higher on plan a, Chris is better off having plan a when sales are higher than $5,400. At this point Chris is earning 9% commission, rather than 4% in plan b.