Norton Food Wholesale pays all sales representatives 5% commission on the first $20,000 of their individual sales and 8% commission on their individual sales in excess of $20,000 . Assume that Eric Hayes sold merchandise valued at $59,500 during the month of April. Calculate the following amounts. (a) Commission on sales in the sales base: (b) Commission on additional sales: (c) Gross pay:
Question
Norton Food Wholesale pays all sales representatives 5% commission on the first 20,000 . Assume that Eric Hayes sold merchandise valued at $59,500 during the month of April. Calculate the following amounts. (a) Commission on sales in the sales base:
(b) Commission on additional sales: (c) Gross pay:
Solution
(a) Commission on sales in the sales base:
The sales base is the first $20,000 of individual sales. Eric earns a 5% commission on these sales.
To calculate this, multiply $20,000 by 5% (or 0.05).
1,000
So, Eric earns $1,000 commission on the sales base.
(b) Commission on additional sales:
Additional sales are those in excess of 59,500 - 39,500. Eric earns an 8% commission on these sales.
To calculate this, multiply $39,500 by 8% (or 0.08).
3,160
So, Eric earns $3,160 commission on additional sales.
(c) Gross pay:
Eric's gross pay is the sum of the commission on the sales base and the commission on additional sales.
3,160 (commission on additional sales) = $4,160
So, Eric's gross pay for the month of April is $4,160.
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