A sales representative earns a base monthly salary of 2,400. They also earn a commission b… — Armed Services Vocational Aptitude Battery (ASVAB)

A sales representative earns a base monthly salary of $2,400. They also earn a commission based on their total monthly sales volume. The commission structure is as follows: -$ 4\% $on the first$ 15,000 of sales
- $6\%$ on the next $25,000 of sales -$ 8.5\% $on any sales exceeding$ 40,000

In addition, if their total monthly sales exceed $50,000, they receive a one-time performance bonus of$ 750. Last month, the representative had a total sales volume of $54,200. What was the representative's total gross income for the month?

Answer: 6457 $

Answer

6457

The correct gross income is found by calculating the commission for each tier separately (

600 for the first tier,

1,500 for the second tier, and

1,207 for the third tier), summing them to get a total commission of

3,307, and then adding the base salary of

2,400 and the

750 performance bonus (awarded since sales exceeded

50,000) for a final total of

6,457.

Step-by-Step Solution

Calculate the commission for the first tier (

0 to

15,000).

15,000 \times 0.04 =

600

The representative earns a 4% commission on the first $15,000 of sales.

Calculate the commission for the second tier (the next $25,000).

25,000 \times 0.06 =

1,500

The 6% rate applies to the next

25,000 of sales (covering sales from

15,000 to $40,000).

Calculate the commission for the third tier (sales exceeding $40,000).

54,200 -

40,000 =

14,200.

14,200 \times 0.085 = $1,207

The 8.5% rate applies to any sales exceeding the $40,000 threshold.

Sum the total commission.

600 +

1,500 +

1,207 =

3,307

Adding the amounts from all three tiers gives the total commission earned.

Calculate the total gross income by adding the base salary, total commission, and the performance bonus.

2,400 +

3,307 +

750 =

6,457

Total sales (

54,200) exceeded the

50,000 threshold, so the $750 bonus is awarded. Gross income includes base pay, total commission, and the bonus.

Key Concept

Calculating tiered commissions, applying percentages to multiple thresholds, and combining various income streams.

Question

Answer

Step-by-Step Solution

Key Concept

Common Mistakes

Topics

More questions from this topic