Chase wants to earn at least $900 this month in commission. What is the minimum amount he needs to sell in order to earn $900 if he earns a 3.3% commission on everything he sells? Round to the nearest dollar.
The Correct Answer and Explanation is :
To determine how much Chase needs to sell in order to earn at least $900 in commission with a commission rate of 3.3%, we can use the formula for calculating commission:
[
\text{Commission} = \text{Sales} \times \text{Commission Rate}
]
Given:
- Desired Commission = $900
- Commission Rate = 3.3% (or 0.033 in decimal form)
We can rearrange the formula to solve for Sales:
[
\text{Sales} = \frac{\text{Commission}}{\text{Commission Rate}}
]
Substituting the known values into the equation:
[
\text{Sales} = \frac{900}{0.033}
]
Calculating this gives:
[
\text{Sales} = \frac{900}{0.033} \approx 27272.73
]
Since we need to round to the nearest dollar, we round 27272.73 to $27,273.
Explanation:
Chase’s commission structure indicates that for every dollar of sales he generates, he earns 3.3 cents. To find out how much he needs to sell to earn a specific commission, we need to ensure that the total commission equals or exceeds the target of $900.
The calculation begins by converting the percentage into a decimal for ease of computation. By dividing the desired commission amount ($900) by the commission rate (0.033), we determine the total sales required.
This approach highlights the importance of understanding how commission rates work, especially in sales positions where earnings can significantly fluctuate based on performance. By calculating the necessary sales figure, Chase can set realistic sales goals for the month and devise strategies to achieve them. If he manages to exceed this sales target, his commission will increase proportionally, potentially boosting his overall income for the month. Thus, achieving the minimum sales threshold is crucial for meeting his financial goals.