Ed works for Lanier Business Products as a sales representative.He receives a straight commission.In weeks when his earned commission is less than $600,the company loans him enough money against future commissions to allow him to receive $600.In weeks when Ed earns more than $600,the extra is used for repaying the previous loan.For Ed,the guaranteed $600 is his:
A) sales quota.
B) activity quota.
C) draw.
D) bonus.
E) straight salary.

Question

Quizplus · Accepted Answer

The guaranteed $600 that Ed receives is known as a draw, which is essentially an advance on future commissions. Unlike a salary or bonus, the draw must be repaid by future earnings. It is not a sales quota because it is not a specific sales target that Ed must reach. It is also not an activity quota as this refers to a minimum level of sales activities (such as number of calls made or meetings held) rather than a guaranteed payment.

Ed Works for Lanier Business Products as a Sales Representative