Marcus can choose between a monthly salary of $1,500 plus 5.5% of sales or $2,400 plus 3% of sales. He expects sales between $5,000 and $10,000 a month. Which salary option should he choose to earn the most money?
To determine which salary option Person M should choose, we can calculate his expected earnings under each option for different levels of sales and compare them.
Option 1: Monthly salary of $1,500 + 5.5% of sales so person M's total earnings under this option can be calculated as Earnings = $1,500 + 0.055 x Sales
Option 2: Monthly salary of $2,400 plus 3% of salesperson M's total earnings under this option can be calculated as Earnings = $2,400 + 0.03 x Sales
Excels snip-
Final answer -
From the table, we can see that for all levels of sales, person M will earn more under Option 2, which offers a higher base salary ($2,400) than Option 1 ($1,500) and a lower commission rate (3% compared to 5.5%). Therefore, person M should choose Option 2 .
