Questions: Choose the method of pay that would result in the most earnings for one month on sales of 60,000. a. Straight commission of 6% on all sales. b. Monthly salary of 1,500, plus 3% commission on all sales. c. Graduated commission of 4% on the first 50,000 in sales and 10% on anything over that. d. Graduated commission of 5% on the first 40,000 in sales and 9% on anything over that. Please select the best answer from the choices provided

Solution Steps

Option (a) is a straight commission of 6% on all sales. For sales of $60,000, the earnings are: \[ \text{Earnings} = 0.06 \times 60,000 = 3,600 \] So, the earnings for option (a) are $3,600.

Option (b) is a monthly salary of $1,500 plus a 3% commission on all sales. For sales of $60,000, the earnings are: \[ \text{Earnings} = 1,500 + (0.03 \times 60,000) = 1,500 + 1,800 = 3,300 \] So, the earnings for option (b) are $3,300.

Option (c) is a graduated commission of 4% on the first $50,000 in sales and 10% on anything over that. For sales of $60,000, the earnings are: \[ \text{Earnings} = (0.04 \times 50,000) + (0.10 \times (60,000 - 50,000)) = 2,000 + 1,000 = 3,000 \] So, the earnings for option (c) are $3,000.

Option (d) is a graduated commission of 5% on the first $40,000 in sales and 9% on anything over that. For sales of $60,000, the earnings are: \[ \text{Earnings} = (0.05 \times 40,000) + (0.09 \times (60,000 - 40,000)) = 2,000 + 1,800 = 3,800 \] So, the earnings for option (d) are $3,800.

Final Answer