2
QuizMultiple Choice

Variable Earnings

Question 2 • SHS Alt Personal Finance - 2021

Choose the method of pay that would result in the most earnings for one month on sales of $40,000.

Answer
A
Straight commission of 7.5% on all sales.
B
Monthly salary of $1,600 plus 2.5% commission on all sales.
C
Graduated commission of 5% on the first $30,000 in sales and 6% on anything over that.
D
Graduated commission of 4% on the first $25,000 in sales and 8% on anything over that.

Explanation

For $40,000 in sales, the straight commission pays 7.5% × $40,000 = $3,000. The other methods pay $2,600, $2,100, and $2,200, respectively. Therefore, the straight commission of 7.5% on all sales results in the most earnings.

AI-written and checked against the verified answer.

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