Question
A small business is considering hiring a new sales representative (sales rep) to market its product...
A small business is considering hiring a new sales representative (sales rep) to market its product in a nearby city. Two pay scales are under consideration.
Pay scale 1: Pay the sales rep a base yearly
salary of $14,400 plus a commission of 8% of total yearly
sales.
Pay scale 2: Pay the sales rep a base yearly
salary of $18,000 plus a commission of 5% of total yearly
sales.
(a) For each of the pay scales above, use a formula to express the
total yearly earnings for the sales rep as a function of total
yearly sales s. (Give percents in decimal form.)
| pay scale 1 |
T1(s) = |
| pay scale 2 |
T2(s) = |
(b) What amount of total yearly sales would result in the same
total yearly earnings for the sales rep no matter which of the two
pay scales is used?
$
(c) On the same screen, plot the graphs of the functions you made
in part (a). (Let T be total yearly earnings and
s the total yearly sales. Select the correct graph.)
(d) If you were a sales rep negotiating for the new position, under what conditions would you prefer pay scale 1?
when you expect total sales to exceed $27,692when you expect total sales to be below $27,692 when you expect total sales to exceed $120,000when you expect total sales to be below $120,000
Under what conditions would you prefer pay scale 2?
when you expect total sales to exceed $27,692when you expect total sales to be below $27,692 when you expect total sales to exceed $120,000when you expect total sales to be below $120,000
Homework Answers
Answer #1
A)
- Let s denote the total yearly sales and P1 = P1(s) denote the total yearly income under pay scale #1 and let P2 = P2(s) denote the total yearly income under pay scale 2.
So, P1(s) = 14,400+0.08s and P2(s) = 18,000+0.05s
B)as per the question , $120,000
- 14,400+0.08s = 18000+0.05s
- 0.08s-0.5s = 18000-14400
- 0.03s = 3600 = $120,000
C) We enter our formulas for P1 and P2 as Y1 and Y2 in the calculator. We set the horizontal range to be from 0 to 200,000 and let Zoomfit set the vertical range. The vertical range is from 10000 to 26000 and so we set the vertical scale as 1000. The two graphs are shown to the right. The line which is lower when s = 0 is P1(s). Picture is attached.
D) Prefer pay scale 1 when total sales are expected to exceed $120,000
- Prefer pay scale 2 when total sales are expected to be less than $120,000
Not the answer you're looking for?
Similar Questions
The table below shows the salary plan for new employees at a company that sells furniture....
The table below shows the salary plan for new employees at a
company that sells furniture. A new employee earns
$25,000
in base salary and
8%
commission on furniture sold after his or her first
$2,000
in sales for the year.
Complete the
table by entering a new employee’s yearly salary at each level of
sales.
Sales
Yearly salary
($)
$0
$
$1500
$
$2000
$
$5000
$
$10,000
$
$50,000
$
$100,000
$
Write an algebraic model for
this...
Your client travels extensively with his company for work, to market new products throughout Canada. When...
Your client travels extensively with his company for work, to
market new products throughout Canada. When your client travels,
they are typically out of town for more than 12 hours. Your client
has provided you with the following info on income and expenses
incurred, for 2020:
Base salary (per month) of: $2,450
Commission rate as a % of gross sales: 5%
Total commission income earned in the year: $36,000
Hotel and airfare expenses: $17,000
Out of town meals: $7,000
Entertainment...
For many years, Mr Leung has been employed as a sales representative of a real estate...
For many years, Mr Leung has been employed as a sales
representative of a real estate company, Hit and Run Limited
(‘HAR’). At all relevant times, he has paid salaries tax on his
earnings at the standard rate. His earnings consist of a basic
salary (which must be repaid if his sales results do not reach a
prescribed minimum level) plus commission. His commission earned
over the past two years has been very high. He has a wife who
operates...
For many years, Mr Leung has been employed as a sales representative of a real estate...
For many years, Mr Leung has been employed as a sales
representative of a real estate company, Hit and Run Limited
(‘HAR’). At all relevant times, he has paid salaries tax on his
earnings at the standard rate. His earnings consist of a basic
salary (which must be repaid if his sales results do not reach a
prescribed minimum level) plus commission. His commission earned
over the past two years has been very high. He has a wife who
operates...
Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales...
Pittman Company is a small but growing manufacturer of
telecommunications equipment. The company has no sales force of its
own; rather, it relies completely on independent sales agents to
market its products. These agents are paid a sales commission of
16% for all items sold.
Barbara Cheney, Pittman’s controller, has just prepared the
company’s budgeted income statement for next year. The statement
follows:
Pittman Company
Budgeted Income Statement
For the Year Ended December 31
Sales
$
16,300,000
Manufacturing expenses:
Variable...
Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales...
Pittman Company is a small but growing manufacturer of
telecommunications equipment. The company has no sales force of its
own; rather, it relies completely on independent sales agents to
market its products. These agents are paid a sales commission of
19% for all items sold.
Barbara Cheney, Pittman’s controller, has just prepared the
company’s budgeted income statement for next year. The statement
follows:
Pittman Company
Budgeted Income Statement
For the Year Ended December 31
Sales
$
17,200,000
Manufacturing expenses:
Variable...
Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales...
Pittman Company is a small but growing manufacturer of
telecommunications equipment. The company has no sales force of its
own; rather, it relies completely on independent sales agents to
market its products. These agents are paid a sales commission of
14% for all items sold. Barbara Cheney, Pittman’s controller, has
just prepared the company’s budgeted income statement for next
year. The statement follows: Pittman Company Budgeted Income
Statement For the Year Ended December 31 Sales $ 18,400,000
Manufacturing expenses: Variable...
Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales...
Pittman Company is a small but growing manufacturer of
telecommunications equipment. The company has no sales force of its
own; rather, it relies completely on independent sales agents to
market its products. These agents are paid a sales commission of
15% for all items sold. Barbara Cheney, Pittman’s controller, has
just prepared the company’s budgeted income statement for next year
as follows: Pittman Company Budgeted Income Statement For the Year
Ended December 31 Sales $ 23,500,000 Manufacturing expenses:
Variable $...
Determine the amount of sales (units) that would be necessary under Break-Even Sales Under Present and...
Determine the amount of sales (units) that would be necessary
under Break-Even Sales Under Present and Proposed Conditions Darby
Company, operating at full capacity, sold 108,000 units at a price
of $120 per unit during the current year. Its income statement for
the current year is as follows: Sales $12,960,000 Cost of goods
sold 6,400,000 Gross profit $6,560,000 Expenses: Selling expenses
$3,200,000 Administrative expenses 3,200,000 Total expenses
6,400,000 Income from operations $160,000 The division of costs
between fixed and variable...
Tanek Corp.’s sales slumped badly in 2017. For the first time in its history, it operated...
Tanek Corp.’s sales slumped badly in 2017. For the first time in
its history, it operated at a loss. The company’s income statement
showed the following results from selling 515,500 units of product:
sales $2,577,500, total costs and expenses $2,680,600, and net loss
$103,100. Costs and expenses consisted of the amounts shown
below.
Total
Variable
Fixed
Cost of goods sold
$2,206,340
$1,639,290
$567,050
Selling expenses
257,750
94,852
162,898
Administrative expenses
216,510
70,108
146,402
$2,680,600
$1,804,250
$876,350
Management is considering the...
ADVERTISEMENT
Need Online Homework Help?
Get Answers For Free
Most questions answered within 1 hours.
ADVERTISEMENT
Active Questions
asked 6 minutes ago
asked 6 minutes ago
asked 10 minutes ago
asked 14 minutes ago
asked 16 minutes ago
asked 34 minutes ago
asked 37 minutes ago
asked 45 minutes ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago