Problema Solution
A person pays the manager of his original store $700 plus 21% of the store's total weekly sales. The marketing data indicates that with a good sales force in the new store, the total weekly sales will be the same as the original store. To motivate sales at the new store, he will pay the manager a smaller base pay of $600 and a higher commission rate of 31%. He predicts that both managers will have the same total sales and earn the same weekly pay with this salary plan. Determine the amount of weekly sales and the manager's weekly salary at each store with this plan.
Answer provided by our tutors
Original Store: Managers Salary = 700 + 0.21*S, where S is the stores total weekly sales
New Store: Managers Salary = 600 + 0.31*S, where S is the stores total weekly sales
He predicts that both managers will have the same total sales and earn the same weekly pay with this salary plan that is
700 + 0.21*S = 600 + 0.31*S
(0.31 - 0.21)*S = 700 - 600
0.10*S = 100
S = 100/0.10
S = $1000
the weekly sales is $1000.
the managers salary will be 700 + 0.21*1000 = 600 + 0.31*1000 = $921.