Alix 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 Alix receive in his gross pay for the end of his first month?
A) $800.00
B) $1,250.00
C) $1,550.00
D) $1,750.00

Question

Quizplus · Accepted Answer

Alix's semi-monthly salary is $18,000 / 24 = $750.

His commission on four units sold with a total of $1,000 is 5% x $1,000 = $50.

He requested a 5% draw against his $15,000 monthly minimum sales, which is $750, so he should receive an additional $750 x 5% = $37.50.

Therefore, his gross pay for the end of his first month is $750 (semi-monthly salary) + $50 (commissions) + $37.50 (draw) = $837.50 for each pay date, or a total of $1,675.

However, the question is asking for his gross pay for the end of his first month, which is not the same thing as his total gross pay.

The first pay date would only include half of his semi-monthly pay ($375) plus half of his commissions ($25).

The final pay date of the month would include the remaining half of his semi-monthly pay plus the remaining commissions and his draw.

Therefore, Alix should receive $375 + $25 = $400 on the first pay date and $837.50 - ($375 + $25) = $437.50 on the final pay date for a total of $400 + $437.50 = $837.50.

The answer is C: $1,550.00.

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