Q:

# Julia is offered a job selling advertising for two different companies. Company A offers a base salary of $30,000 per year plus a year-end bonus equal to 3% of her total sales. Company B offers a base salary of$25,000 per year plus a year-end bonus equal to 5% of her total sales. Which statement best describes the two offers?A. Company A pays better when total sales are less than $37,500, but company B pays better when total sales exceed$37,500.B. Company A pays better when total sales are less than $250,000, but company B pays better when total sales exceed$250,000.C. Company B pays better when total sales are less than  $37,500, but company A pays better when total sales exceed$37,500.D. Company B pays better when total sales are less than $250,000, but company A pays better when total sales exceed$250,000.

Accepted Solution

A:
A=30000+0.03S and B=25000+0.05S.
When A=B, 5000=0.02S, so S=$250000 when the earnings are the same. The slope of A is smaller than that of B. In excess of this value of S B pays more than A and below it A pays more than B. So answer option B. (When S=0, clearly A is better than B. Put S=$300000, A pays $39000 and B pays$40000).