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.
A=30000+0.03S and B=25000+0.05S. Setting A equal to B gives us 5000=0.02S, which results in S=$250000 for equal earnings. The slope of A is less steep compared to that of B. Beyond this S value, B compensates more than A, while underneath it, A compensates more than B. Therefore, the correct answer is option B. (At S=0, it is evident that A is superior to B. If S=$300000, A yields $39000 and B yields $40000).
