3
AssignmentMultiple Choice

Variable Earnings

Question 3 • FL-2102373-Personal Finance and Money Management Honors

The table below shows the earnings, in thousands of dollars, for three different commissioned employees. $2,000 + 3% on all sales7% on all sales5% on the first $40,000 + 8% on anything over $40,000December4.45.65.2 Who had the largest dollar amount in sales for the month of December?

Answer
A
The salary plus commission employee.
B
The straight commission employee.
C
The graduated commission employee.
D
They each had the same dollar amount in sales.

Explanation

Convert the earnings from thousands of dollars: the employees earned $4,400, $5,600, and $5,200. For the salary-plus-commission employee, ($4,400 − $2,000) ÷ 0.03 = $80,000 in sales. The straight-commission employee sold $5,600 ÷ 0.07 = $80,000. The graduated employee earned $2,000 on the first $40,000 in sales, leaving $3,200; at 8%, that represents another $40,000 in sales. They each had the same sales amount, so the correct choice is “They each had the same dollar amount in sales.”

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