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)$800.00
B)$1,250.00
C)$1,550.00
D)$1,750.00

Question

Quizplus · Accepted Answer

To determine Alex's gross pay for the end of his first month, we need to calculate his semi-monthly base salary and his commissions earned.

Semi-monthly base salary: $18,000 / 24 = $750 per pay period

Commissions earned: 5% of $1,000 = $50

To calculate his draw against his monthly minimum sales of $15,000, we need to find 5% of $15,000, which is $750.

Since Alex has only sold $1,000 worth of units during his first month, he is entitled to a draw of $750 * 5% = $37.50.

Therefore, his gross pay for the end of his first month is:

Semi-monthly base salary + commissions earned + draw against monthly minimum sales

$750 + $50 + $37.50 = $837.50 per pay period

Since there are two pay periods in a month, Alex's total gross pay for the end of his first month is:

$837.50 x 2 = $1,675.00

However, since Alex received a 5% draw against his monthly minimum sales, we need to deduct this amount from his gross pay:

$1,675.00 - $37.50 = $1,637.50

Therefore, the answer is C) $1,550.00.

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