Question

The earnings of two employees are given below:
Employee A: 6% commission on all sales
Employee B: 4% commission on the first $80,000 and 8% on anything over $80,000
How much more does a straight commission employee make than the graduated commission employee for sales of $100,000?
a.
$1,200
b.
$1,600
c.
$2,000
d.
$3,200

Answer 1

Employee A: 6% of $100,000 = 0.06 × 100,000 = $6,000
Employee B: 4% of $80,000 = 0.04 × 80,000 = $3,200; plus 8% of $20,000 = 0.08 × 20,000 = $1,600; total = $4,800

Difference = $6,000 − $4,800 = $1,200

Answer: a. $1,200