Question 4 of 20 : Select the best answer for the question. 4. Rob Polanski is a tractor salesman. Last week his total sales amounted to $38,642.00, and he received $2,704.94 in commission. What is his rate of commission? A. 6% B. 8.4% C. 7%
The correct answer and explanation is:
Correct Answer: C. 7%
Explanation:
To determine Rob Polanski’s rate of commission, we use the formula for commission rate: Commission Rate=(Commission EarnedTotal Sales)×100\text{Commission Rate} = \left( \frac{\text{Commission Earned}}{\text{Total Sales}} \right) \times 100
In this case:
- Commission Earned = $2,704.94
- Total Sales = $38,642.00
Substituting the values into the formula: Commission Rate=(2,704.9438,642.00)×100\text{Commission Rate} = \left( \frac{2,704.94}{38,642.00} \right) \times 100
Step-by-step calculation:
- Divide $2,704.94 by $38,642.00: 2,704.9438,642.00=0.07\frac{2,704.94}{38,642.00} = 0.07
- Multiply 0.07 by 100 to convert to a percentage: 0.07×100=7%0.07 \times 100 = 7\%
Thus, Rob Polanski’s commission rate is 7%.
Why 7% is the correct choice:
- The calculated commission rate of 7% matches exactly with option C.
- Option A (6%) is too low and does not reflect the given data.
- Option B (8.4%) is higher than the calculated rate and is therefore incorrect.
Practical Insight:
The commission rate is a percentage of the total sales that the salesperson earns as compensation. In this scenario, the 7% commission rate indicates that for every $100 of sales Rob makes, he earns $7 in commission. This calculation is crucial for tracking earnings and setting sales targets. It also highlights the importance of accurate sales and commission records for financial planning.