Ron Company has the following commission schedule:

Question

Commission rate Sales
2 % Up to $80,000
3.5 % Excess of $80,000 to $100,000
4 % More than $100,000

Calculate the gross earning.

Employee            Total             sales Gross earning
Carol Reese     $151,000              $

Answer 1

You can break her earnings up into tiers! So she would earn

2% on the first $80,000 = $1600

3.5% on the sales between $80,000 and $100,000 = $700

4% on sales over $100,000 = $2040

meaning that her total gross earnings are $1600 + $700 + $2040 = $4340

Answer 2

151000 - 80000 = 71000

71000 - (100000 - 80000) = 51000

 

gross earnings = 0.02(80000) + 0.035(20000) + 0.04(51000)

 

= 2(800) + 35(20) + 4(510)

 

= 1600 + 700 + 2040

 

= $4,340

Answer 3

Gross earning = Sales + Commission

Gross earning = 151,000 + 0.02(80,000) + 0.035(20,000) + 0.04(51,000)

Gross earning = 151,000 + 1,600 + 700 + 2,040

Gross earning = 155,340

Answer 4

The strategy for a problem like this is to compute each category separately, then add the results from all categories.

 

Under the given commission structure, an employee with $151,000 in sales, earns the following commissions:

2.0% X $80,000

3.5% X $20,000 (i.e. $100,000-$80,000)

4.0% X $51,000 (i.e. $151,000-$100,000)

 

There are a couple of different ways to handle the percentages, but the most obvious way is to convert them to decimals:

(0.02 X 80,000)+(0.035 X 20,000)+(0.04 X 51,000)=

The other way is to move the decimal points of the dollar amounts 2 places to the left - which is to say drop 2 zeroes from each of the dollar amounts:

(2 X 800)+(3.5 X 200)+(4 X 510)=

Either way, you reach the same result:

$1600+$700+$2,040=$4340.00

 

This procedure is easily applicable to a variety of problems. Good luck!