Question 1200487: A second employee of the computer
store in Problem 57 is paid a base salary of $3,000 a month
plus a 5% commission on all sales during the month.
(A) How much must this employee sell in one month to earn
a total of $4,000 for the month?
(B) Determine the sales level at which both employees
receive the same monthly income.
(C) If employees can select either of these payment methods, how would you advise an employee to make this
selection?
Answer by GingerAle(43)   (Show Source):
You can put this solution on YOUR website! **A) Sales needed to earn $4,000:**
* **Let 'S' be the total sales amount.**
* **Equation:**
* $3,000 (base salary) + 0.05S (commission) = $4,000 (desired earnings)
* **Solve for S:**
* 0.05S = $4,000 - $3,000
* 0.05S = $1,000
* S = $1,000 / 0.05
* S = $20,000
* **The employee must sell $20,000 in one month to earn a total of $4,000.**
**B) Sales level for equal income:**
* **Let 'S' be the sales amount where both employees earn the same.**
* **Income of the first employee (from Problem 57):**
* $1,175 + 0.06S
* **Income of the second employee:**
* $3,000 + 0.05S
* **Set the incomes equal:**
* $1,175 + 0.06S = $3,000 + 0.05S
* **Solve for S:**
* 0.06S - 0.05S = $3,000 - $1,175
* 0.01S = $1,825
* S = $182,500
* **Both employees will receive the same monthly income if the sales level reaches $182,500.**
**C) Advising an employee:**
* **Factors to consider:**
* **Sales expectations:** If the employee consistently expects to achieve high sales volumes (above $182,500), the commission-based option would likely be more lucrative.
* **Risk tolerance:** The commission-based option carries more risk. If sales are lower than expected, the income will be lower than the fixed base salary.
* **Sales consistency:** If sales fluctuate significantly from month to month, the commission-based option could lead to income instability.
* **Personal preferences:** Some employees may prefer the stability of a base salary, while others may be motivated by the potential for higher earnings through commissions.
* **Recommendation:**
* If the employee is confident in their ability to consistently achieve high sales and is comfortable with the risk, the commission-based option could be more rewarding.
* If the employee prefers a more stable income and is less concerned about maximizing earnings, the base salary option might be a better choice.
**Disclaimer:** This analysis provides a general framework. Individual circumstances and career goals should also be carefully considered when making this decision.
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