Examkin

Question

Difficulty: MediumWages, Salaries, and Commissions

A wholesale electronics representative earns a guaranteed weekly base salary of $800\$800. In addition to the base salary, he earns a 5%5\% commission on any weekly sales that exceed a $2,000\$2,000 quota. If his total sales for the week were $6,500\$6,500, what was his total gross pay for the week?

  1. A
    $225\$225
  2. B
    $1,125\$1,125
  3. $1,025\$1,025Answer
  4. D
    $3,050\$3,050

Answer

$1,025\$1,025
The total gross pay is the sum of the base salary and the earned commission. First, subtract the quota from total sales to find the commissionable amount: $6,500−$2,000=$4,500\$6,500 - \$2,000 = \$4,500. Next, calculate the 5%5\% commission on this amount: $4,500×0.05=$225\$4,500 \times 0.05 = \$225. Finally, add the commission to the base salary: $800+$225=$1,025\$800 + \$225 = \$1,025.

Step-by-Step Solution

1
Determine the amount of sales eligible for commission by subtracting the quota from total sales.
$6,500−$2,000=$4,500\$6,500 - \$2,000 = \$4,500
The 5%5\% commission is only earned on sales that exceed the $2,000\$2,000 quota.
2
Calculate the commission amount by converting 5%5\% to a decimal and multiplying it by the eligible sales.
0.05×$4,500=$2250.05 \times \$4,500 = \$225
This determines the additional earnings from sales performance.
3
Add the calculated commission to the guaranteed base salary to find the total gross pay.
$800+$225=$1,025\$800 + \$225 = \$1,025
Total gross pay is the sum of all fixed and variable earnings.

Key Concept

Calculating total gross pay involving a base salary and a threshold-based commission.
Rate this question

Topics

Wages, Salaries, and Commissions

More questions from this topic