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 future 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 situation described is known as a draw against commission, where the company loans Ed money upfront to guarantee him a minimum income of $600. This type of arrangement is commonly used for sales reps who work on commission-only pay structures. The $600 is not a sales quota or bonus, as it is not tied to any specific sales target or performance metric. It is also not an activity quota or straight salary, as Ed's income is still based on his sales performance, and any excess earned beyond $600 is used to repay the company loan. Therefore, the best choice for Ed's situation is a draw (answer C).

Ed Works for Lanier Business Products as a Sales Representative