Question

Wilson Rooeboker brokers sales agreements for a major home builders chain. He is paid a straight commission of 1.5% of the contract plus an annual bonus of 2.5% of total contracts over $1,500,000 per year. What is his total pay for a year in which he had total contracts for $2,555,500?

Answer 1

$64,720

Explanation:

The straightforward way to figure this is ...

total pay = straight commission + annual bonus

= 1.5% × 2,555,500 + 2.5% ×(2,555,500 -1,500,000)

However, this expression can be simplified a little bit to ...

2,555,500 × (1.5% +2.5%) -2.5% × 1,500,000

= 4% × 2,555,000 -2.5% × 1,500,000

= 102,220 -37,500

total pay = $64,720