Given :- An agent is offered a salary of Rs. 500 per month plus a commission is 8% on sales; or only commission at 10% . If the average annual sales amount to Rs. 2,50,000 which of the terms would be prefer. ?

Solution :-

Case 1) :- Rs. 500 per month plus a commission is 8% on sales .

→ Total sales = Rs. 2,50,000 annually .

so,

→ Sales per month = 250000/12 = Rs. (62500/3)

then,

→ commission = 8% of sales = (8 * 62500) / 300 ≈ Rs.1666.67

then,

→ Total salary per month = 500 + 1666.67 = Rs.2166.67

Case 2) :- only commission at 10% .

→ Sales per month = 250000/12 = Rs. (62500/3)

so,

→ Total salary per month = (10 * 62500)/300 ≈ Rs.2083.33

since,

→ Rs.2166.67 > Rs.2083.33

→ Monthly salary in FIRST case > Monthly salary in second case .

therefore, we can conclude that, the agent must prefer first case (Rs. 500 per month plus a commission is 8% on sales) .

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