Who had the largest dollar amount in sales for the month of January?
a. The salary plus commission employee.
b. The straight commission employee.
c. The graduated commission employee.
d. They each had the same dollar amount in sales.
Answer (2)
Calculate the sales for the salary plus commission employee: $40,000 \times 0.035 = $1400.
Calculate the sales for the straight commission employee: $40,000 \times 0.0385 = $1540.
Calculate the sales for the graduated commission employee: $40,000 \times 0.036 = $1440.
The straight commission employee had the largest dollar amount in sales: B .
Explanation
Understanding the Problem We are given a table with commission percentages for different employees (salary plus commission, straight commission, and graduated commission) for the months of December, January, and February. The total sales amount is $40,000. We need to find out who had the largest dollar amount in sales for the month of January.
Identifying the Given Data The commission percentages for January are: Salary plus commission: 3.5% Straight commission: 3.85% Graduated commission: 3.6%
Calculating Sales for Each Employee To find the dollar amount in sales for each employee type, we multiply the total sales amount ($40,000) by their respective commission percentage for January. Salary plus commission sales = $40,000 \times 3.5% = $40,000 \times 0.035 = $1400 Straight commission sales = $40,000 \times 3.85% = $40,000 \times 0.0385 = $1540 Graduated commission sales = $40,000 \times 3.6% = $40,000 \times 0.036 = $1440
Comparing Sales and Determining the Largest Amount Comparing the dollar amounts calculated in the previous steps: Salary plus commission: $1400 Straight commission: $1540 Graduated commission: $1440 The straight commission employee had the largest dollar amount in sales for the month of January.
Final Answer The straight commission employee had the largest dollar amount in sales for the month of January.
Examples
Understanding commission structures is crucial in sales and business. For instance, if you're a manager deciding between different commission plans for your sales team, analyzing the potential earnings under each plan (like salary plus commission, straight commission, or graduated commission) helps you design a compensation strategy that motivates your team and aligns with company goals. By calculating potential sales earnings based on different commission rates, you can forecast expenses, set realistic sales targets, and ensure fair compensation for your employees. This approach is also valuable for individual sales professionals to understand their earning potential and optimize their sales strategies.
The straight commission employee had the largest dollar amount in sales for January, totaling $1540, compared to the others. The salary plus commission employee earned $1400 and the graduated commission employee earned $1440. Thus, the correct choice is option B.
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