Question

Pete earns graduated commission on his sales each month. He earns 7% commission on the first $35,000 in sales and 9% on anything over that. If Pete had $43,000 in sales this month, how much commission did he earn? a. $2,610 b. $3,170 c. $3,870 d. $6,880.

Answer 1

The amount of commission Pete earn $3,170.

What is graduate commission?

Graduate commission is a method of providing compensation or incentives to the sales person. The percentage of commission is fix up to a specific amount of sales initiated and increases as the sales increases above that level.

For the given question, the amount of commission will be calculated as follows:

Given:

Total sales is $43,000

Rate of commission up to sales of $35,000 is 7%

Rate of commission above $35,000 is 9%

Therefore the amount of commission will be:

$\begin{aligned} \rm Commission &=(\ 35,000\times 7\%)+((\ 43,000-\ 35,000)\times 9\%)\\ \\ &=(\ 35,000\times7\%)+(\ 8,000\times9\%)\\ \\ &=\ 2,450 + \ 720\\ \\ &=\ 3170\end$

Hence the correct option is B.

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