Leo Corporation Pays Its Employees on a Graduated Commission Scale

question 63

Multiple Choice

Leo Corporation pays its employees on a graduated commission scale: 6% on the first $40,000 in sales, 7% on sales from $40,000 to $80,000, and 9% on sales greater than $80,000. Bernie Kaminsky had sales of $105,000. His commission is:

• A)$2,400
• B)$7,450
• C)$5,200
• D)$1,350
• E)None of these

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Definitions:

Compounded Annually

The method of computing interest that includes both the original amount invested and the interest already earned on that amount each year.

Simple Interest

Interest calculated based only on the principal amount, ignoring the effect of compounding.

Interest

The cost of borrowing money or the return on investment for savings and investments, often expressed as a percentage.

Compounded Annually

Calculating interest on both the initial principal and the accumulated interest from previous periods on an annual basis.