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A salesman has a basic salary of Ksh 15,000 per month. Calculate his commission and total earnings for sales of Ksh 115,000 based on the tiered commission structure provided.

Business/Management

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Answers

2 parts
a

Ksh 2,625\text{Ksh } 2,625

b

Ksh 17,625\text{Ksh } 17,625

Step-by-step solution

6 steps

Here's how to calculate the salesman's commission and total earnings:

  • Basic Salary: Ksh 15,000 per month
  • Total Sales for the month: Ksh 115,000
  • Commission Structure:
    • Up to Ksh 50,000 sales: 0% commission
    • For the 1st Ksh 25,000 above Ksh 50,000 (i.e., sales from Ksh 50,001 to Ksh 75,000): 2.5% commission
    • For the next Ksh 25,000 (i.e., sales from Ksh 75,001 to Ksh 100,000): 5% commission
    • For sales above Ksh 100,000: 5% commission

Part a· 5 steps

How much commission did he earn that month?

  1. Calculate commission for sales up to Ksh 50,000.

    Sales amount: Ksh 50,000
    Commission rate: 0%

    Commission1=50,000×0%=Ksh 0\text{Commission}_1 = 50,000 \times 0\% = \text{Ksh } 0
  2. Calculate commission for the 1st Ksh 25,000 above Ksh 50,000.

    This covers sales from Ksh 50,001 to Ksh 75,000.
    Sales amount in this tier: Ksh 75,000−50,000=25,00075,000 - 50,000 = 25,000
    Commission rate: 2.5%2.5\%

    Commission2=25,000×2.5100=25,000×0.025=Ksh 625\text{Commission}_2 = 25,000 \times \frac{2.5}{100} = 25,000 \times 0.025 = \text{Ksh } 625
  3. Calculate commission for the next Ksh 25,000.

    This covers sales from Ksh 75,001 to Ksh 100,000.
    Sales amount in this tier: Ksh 100,000−75,000=25,000100,000 - 75,000 = 25,000
    Commission rate: 5%5\%

    Commission3=25,000×5100=25,000×0.05=Ksh 1,250\text{Commission}_3 = 25,000 \times \frac{5}{100} = 25,000 \times 0.05 = \text{Ksh } 1,250
  4. Calculate commission for sales above Ksh 100,000.

    Total sales: Ksh 115,000
    Sales amount in this tier: Ksh 115,000−100,000=15,000115,000 - 100,000 = 15,000
    Commission rate: 5%5\%

    Commission4=15,000×5100=15,000×0.05=Ksh 750\text{Commission}_4 = 15,000 \times \frac{5}{100} = 15,000 \times 0.05 = \text{Ksh } 750
  5. Calculate the total commission.

    Total Commission=Commission1+Commission2+Commission3+Commission4\text{Total Commission} = \text{Commission}_1 + \text{Commission}_2 + \text{Commission}_3 + \text{Commission}_4 Total Commission=0+625+1,250+750=Ksh 2,625\text{Total Commission} = 0 + 625 + 1,250 + 750 = \text{Ksh } 2,625

    The commission he earned that month is Ksh 2,625\boxed{\text{Ksh } 2,625}.

Part b

Ksh 17,625\text{Ksh } 17,625

What was his total earning that month?

  1. Add the basic salary and the total commission.

    Total Earning=Basic Salary+Total Commission\text{Total Earning} = \text{Basic Salary} + \text{Total Commission} Total Earning=15,000+2,625=Ksh 17,625\text{Total Earning} = 15,000 + 2,625 = \text{Ksh } 17,625

    His total earning that month was Ksh 17,625\boxed{\text{Ksh } 17,625}.

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