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Difficulty: HardWages, Salaries, and Commissions

A medical equipment technician is compensated with both an hourly wage and a tiered commission. The technician earns a base rate of 24.00perhourforastandard40−hourworkweek,andtime−and−a−halfforanyhoursworkedbeyond40.Additionally,thetechnicianearnsa624.00 per hour for a standard 40-hour workweek, and time-and-a-half for any hours worked beyond 40. Additionally, the technician earns a 6% commission on all service contracts sold up to 5,000 in a week, and an 8% commission on the portion of sales exceeding 5,000.Ifthetechnicianworked46hoursandsold5,000. If the technician worked 46 hours and sold 8,500 in service contracts last week, what were the technician's total gross earnings?

  1. A
    $1,856.00
  2. B
    $1,684.00
  3. C
    $1,234.00
  4. $1,756.00Answer

Answer

The technician's total gross earnings for the week were $1,756.00.
The correct answer is found by calculating each component of the compensation structure and summing them. Regular pay is 40 hours at 24.00/hour(24.00/hour ( 960.00). Overtime pay is 6 hours at the time-and-a-half rate of 36.00/hour(36.00/hour ( 216.00). The tiered commission is calculated as 6% of the first 5,000(5,000 ( 300.00) plus 8% of the remaining 3,500insales(3,500 in sales ( 280.00). Adding these components together (960.00+960.00 + 216.00 + 300.00+300.00 + 280.00) results in total gross earnings of $1,756.00.

Step-by-Step Solution

1
Calculate the regular base pay.
40 hours \times 24.00/hour=24.00/hour = 960.00
The technician is paid the base rate for the first 40 hours worked.
2
Calculate the overtime pay.
6 hours \times (24.00×1.5)=6×24.00 \times 1.5) = 6 \times 36.00 = $216.00
The 6 hours worked beyond the standard 40 hours are paid at time-and-a-half.
3
Calculate the first tier of commission.
5,000×0.06=5,000 \times 0.06 = 300.00
The technician earns a 6% commission on the first $5,000 of service contracts sold.
4
Calculate the second tier of commission.
(8,500−8,500 - 5,000) \times 0.08 = 3,500×0.08=3,500 \times 0.08 = 280.00
The technician earns an 8% commission on any sales amount exceeding the initial $5,000.
5
Calculate total gross earnings.
960.00+960.00 + 216.00 + 300.00+300.00 + 280.00 = $1,756.00
Total gross earnings are the sum of regular pay, overtime pay, and all commission tiers.

Key Concept

Calculating gross earnings involving overtime premiums and multi-tiered commission structures.
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Topics

Wages, Salaries, and Commissions

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