A salesman has a base salary $2600 per month and makes 3 commission on each unit sold. If his total annual compensation is $48,000 and he sold 2000 units, how much does each unit cost

Answer: cost of one unit = $280

Question:

A salesman has a base salary $2600 per month and makes 3% commission on each unit sold. If his total annual compensation is $48,000 and he sold 2000 units, how much does each unit cost

Step-by-step explanation:

Given;

base salary = $2600 per month

Total annual compensation = $48,000 per annum

Number of units sold = 2000

Commission = 3% per unit

Salesman's Salary per annum = $2600 * 12 = $31,200

Total commission earned = total compensation - total yearly salary

Total commission = $48,000 - $31,200 = $16,800

Commission on each unit = total commission/number of units

Unit commission = $16800/2000 = $8.4

Given that the commission per unit is 3% per unit

That is $8.4 is 3% of the cost of each unit.

Cost of each unit = $8.4/3% = $8.4/0.03 = $280

Each unit cost $800

Step-by-step explanation:

Annual compensation = $48,000

Annual number of units sold = 2000

Commission on each item sold = 3%

Compensation for 2000 units = $48,000

Compensation for 1 unit = $48,000/2000 = $24

Cost of one unit = compensation for one unit : commission on one unit = $24 : 3% = $24 : 0.03 = $800