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Question

Difficulty: MediumWages, Salaries, and Commissions

An inside sales representative is compensated with a fixed weekly base pay of $450\$450. Furthermore, for any weekly sales volume surpassing an $8,000\$8,000 threshold, they receive a 5%5\% commission on the excess amount. If the representative generated $14,500\$14,500 in sales last week, what was their total gross pay for that week, in dollars?

Answer: 775

Answer

775
The correct answer is determined by first finding the sales amount eligible for commission (14,500−14,500 - 8,000 = 6,500).Next,calculatethe56,500). Next, calculate the 5% commission on this excess amount ( 6,500 \times 0.05 = 325).Finally,addthiscommissiontothefixedweeklybasepaytofindthetotalgrosspay(325). Finally, add this commission to the fixed weekly base pay to find the total gross pay ( 450 + 325=325 = 775).

Step-by-Step Solution

1
Determine the portion of sales subject to the commission rate.
$14,500−$8,000=$6,500\$14,500 - \$8,000 = \$6,500
The commission is only applied to the sales volume that surpasses the $8,000 threshold.
2
Calculate the commission earned on the excess sales.
$6,500×0.05=$325\$6,500 \times 0.05 = \$325
The representative earns 5% on the eligible sales amount.
3
Calculate the total gross pay.
$450+$325=$775\$450 + \$325 = \$775
Total gross pay is the sum of the fixed base pay and the earned commission.

Key Concept

Calculating total gross pay using a base salary and a commission rate applied to sales above a specified threshold.
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Topics

Wages, Salaries, and Commissions

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