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Difficulty: MediumWages, Salaries, and Commissions

A corporate travel agent earns a fixed base salary of $2,400\$2,400 per month, plus a 6%6\% commission on the total value of all bookings she makes. If her goal is to earn exactly $4,200\$4,200 in gross pay this month, what must be the total value of her bookings?

  1. A
    $70,000\$70,000
  2. $30,000\$30,000Answer
  3. C
    $3,000\$3,000
  4. D
    $1,794\$1,794

Answer

$30,000\$30,000
The total gross pay consists of the base salary plus the commission. By subtracting the base salary of $2,400\$2,400 from the target gross pay of $4,200\$4,200, the required commission is determined to be $1,800\$1,800. Since the commission rate is 6%6\%, dividing $1,800\$1,800 by 0.060.06 yields the total required bookings of $30,000\$30,000.

Step-by-Step Solution

1
Determine the amount of pay that must come from commission.
$4,200−$2,400=$1,800\$4,200 - \$2,400 = \$1,800
The base salary is a fixed amount, so the remainder of the target gross pay must be earned through commissions.
2
Convert the commission percentage to a decimal.
6%=0.066\% = 0.06
Percentages must be converted to decimals before they can be used in division calculations.
3
Calculate the total bookings required to earn the target commission.
$1,800÷0.06=$30,000\$1,800 \div 0.06 = \$30,000
Since commission is calculated as (Bookings × Commission Rate), dividing the required commission by the rate gives the required bookings.

Key Concept

Calculating required sales to meet a target income when given a base salary and a commission rate.
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Topics

Wages, Salaries, and Commissions

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