Using a tiered commission where the total broker's commission on a $234,500 sale is 6.5%, and the salesperson receives 30% of the first $2,500, 15% of the amount between $2,500 and $7,500, and 5% of the remainder, what is the salesperson's total compensation?

Using a tiered commission where the total broker's commission on a $234,500 sale is 6.5%, and the salesperson receives 30% of the first $2,500, 15% of the amount between $2,500 and $7,500, and 5% of the remainder, what is the salesperson's total compensation?

• A. $1,887.13
• B. $1,800.00
• C. $2,000.00
• D. $1,500.00

Answer: (A)

This question tests how a tiered payout is calculated on the broker’s total commission, not on the sale price. Start by finding the total broker’s commission: 6.5% of 234,500 equals 15,242.50. Then apply the tiered percentages to that amount: 30% of the first 2,500 yields 750.00. The next slice is the amount between 2,500 and 7,500, which is 5,000; 15% of that is 750.00. The remainder of the commission above 7,500 is 15,242.50 − 7,500 = 7,742.50; 5% of that is 387.125. Add the three pieces: 750.00 + 750.00 + 387.125 = 1,887.125, which rounds to $1,887.13. So the salesperson’s total compensation is $1,887.13.

This question tests how a tiered payout is calculated on the broker’s total commission, not on the sale price. Start by finding the total broker’s commission: 6.5% of 234,500 equals 15,242.50.

Then apply the tiered percentages to that amount: 30% of the first 2,500 yields 750.00. The next slice is the amount between 2,500 and 7,500, which is 5,000; 15% of that is 750.00. The remainder of the commission above 7,500 is 15,242.50 − 7,500 = 7,742.50; 5% of that is 387.125.

Add the three pieces: 750.00 + 750.00 + 387.125 = 1,887.125, which rounds to $1,887.13.

So the salesperson’s total compensation is $1,887.13.