Alex is a salesperson who receives an annual salary of $18,000 paid semimonthly plus commissions of 5% of the retail price of each unit he sells which is paid on the ﬁnal pay date of the month. During his ﬁrst month of employment, he sold four units for a total of $1,000 and requested a
5% draw against his $15,000 monthly minimum sales, in accordance with his employment agreement. How much should Alex receive in his
Gross pay for the end of his ﬁrst month?
A) $1,750.
B) $1,250.
C) $800.
D) $1,550.

Question

Quizplus · Accepted Answer

First, we need to calculate the commission earned by Alex for the four units sold. Since the total retail price of the units sold is $1,000, Alex's commission would be 5% of $1,000, which is $50 per unit. The total commission for all four units would be $50 x 4 = $200.

Next, we need to calculate the amount of the draw that Alex can request. According to the employment agreement, he is entitled to a 5% draw against his $15,000 monthly minimum sales, which is $750 ($15,000 x 5%).

Now we can calculate Alex's gross pay for the end of his first month:

- Salary: Alex's annual salary is $18,000, which means his semi-monthly salary is $750 ($18,000 / 24). Therefore, his gross salary for the first month would be $750 x 2 = $1,500.
- Commission: Alex earned $200 in commissions, which would be paid on the final pay date of the month.
- Draw: Alex requested a draw of $750, which would be deducted from his commission earnings.

Therefore, Alex's total gross pay for the end of his first month would be:
$1,500 (salary) + $200 (commission) - $750 (draw) = $950.

However, we need to remember that Alex's commission would only be paid on the final pay date of the month, which means it would not be included in his semimonthly paycheck. Therefore, his gross pay for the end of his first month would be higher, since it would include both his salary and his commission. To calculate this, we can add his semi-monthly salary of $750 and his commission of $200, which totals to $950. Therefore, the correct answer would be D) $1,550.

Alex Is a Salesperson Who Receives an Annual Salary of $18,000