Question

Julia is offered a job selling advertising for two different companies. Company A offers a base salary of $30,000 per year plus a year-end bonus equal to 3% of her total sales. Company B offers a base salary of $25,000 per year plus a year-end bonus equal to 5% of her total sales. Which statement best describes the two offers?
Company A pays better when total sales are less than $37,500, but company B pays better when total sales exceed $37,500.
Company A pays better when total sales are less than $250,000, but company B pays better when total sales exceed $250,000.
Company B pays better when total sales are less than $37,500, but company A pays better when total sales exceed $37,500.
Company B pays better when total sales are less than $250,000, but company A pays better when total sales exceed $250,000.

Answer 1

Let S be total sales.

Company A pay = 30,000 + 0.03S
Company B pay = 25,000 + 0.05S

Set equal: 30,000 + 0.03S = 25,000 + 0.05S
=> 5,000 = 0.02S
=> S = 250,000.

For S < 250,000, A’s total is larger; for S > 250,000, B’s total is larger.

So: "Company A pays better when total sales are less than $250,000, but company B pays better when total sales exceed $250,000."