Edgar Anderson earns $200 a week plus a 15% commission on all sales over $1,000. If Mr. Anderson's sales for one week are $2,500, what is his gross pay for that week?
A. $350
B. $425
C. $525
D. $575
Mr. Anderson's base salary is $200. He gets that no matter what. Then he will earn additional money if he sells over $1,000 worth of goods. He sold $2,500; therefore, he sold $2,500 - 1,000 = $1,500 on which he can earn a commission. His commission is 15%; therefore, 0.15 x $1,500 = $225.00 in commissions. So his total salary for the week is what? $200 base + $225 commission = ??
575
To find Mr. Anderson's gross pay for the week, we need to calculate both his base salary and his commission.
First, let's calculate the commission. The sales that are qualifying for commission are the sales over $1,000. So, his commissionable sales are $2,500 - $1,000 = $1,500.
Now, we can calculate the commission Mr. Anderson will earn based on his commission rate of 15%. The commission is calculated as 15% of $1,500:
Commission = 15% * $1,500 = $225.
Next, we need to calculate Mr. Anderson's base salary, which is $200.
Finally, we need to add the commission and the base salary together to find the gross pay:
Gross Pay = Base Salary + Commission = $200 + $225 = $425.
Therefore, Mr. Anderson's gross pay for that week is $425.
The correct answer is B. $425.