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Columbia Builders Hardware Supply pays all sales representatives 6% commission on the first $40,000 of their individual sales and 11% commission on their individual sales in excess of $40,000. Assume that Kevin Hill sold merchandise valued at $37,500 during the month of November.Calculate the following amounts.(a) Commission on sales in the sales base: $(b) Commission on additional sales: $(c) Gross pay:

Question

Columbia Builders Hardware Supply pays all sales representatives 6% commission on the first 40,000oftheirindividualsalesand1140,000 of their individual sales and 11% commission on their individual sales in excess of 40,000. Assume that Kevin Hill sold merchandise valued at 37,500duringthemonthofNovember.Calculatethefollowingamounts.(a)Commissiononsalesinthesalesbase:37,500 during the month of November.Calculate the following amounts.(a) Commission on sales in the sales base: (b) Commission on additional sales: $(c) Gross pay:

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Solution

(a) Commission on sales in the sales base: Since Kevin Hill sold merchandise valued at 37,500whichislessthan37,500 which is less than 40,000, the entire amount falls into the base commission rate of 6%.

To calculate this, multiply the total sales by the commission rate:

37,5000.06=37,500 * 0.06 = 2,250

So, the commission on sales in the sales base is $2,250.

(b) Commission on additional sales: Since Kevin Hill did not sell more than 40,000worthofmerchandise,hedoesnotreceiveanyadditionalcommission.So,thecommissiononadditionalsalesis40,000 worth of merchandise, he does not receive any additional commission. So, the commission on additional sales is 0.

(c) Gross pay: The gross pay is the sum of the base commission and the additional commission. In this case, it is 2,250+2,250 + 0 = $2,250.

So, Kevin Hill's gross pay for the month of November is $2,250.

This problem has been solved

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