Chapter 7, Problem 20RE

To determine

To determine how much to sell to make second job offer better

Answer to Problem 20RE

Job offer 2 is better if the number of sales must be more than 600,000

Explanation of Solution

Given:

Company 1 offers an annual salary of $55,000 plus a year-end bonus of 1.5% of total sales.

Company 2 offers an annual salary of $52,000 plus a year-end bonus of 2% of total sales.

Let $x$ is the number of sales and $y_1$ is the salary obtained in offer 1 and $y_2$ is the salary obtained in offer 2.

  $y_1=55,000+0.015x$

  $y_2=52,000+0.02x$

Consider $y_1>y_2$

  $\begin{array}{c}55,000+0.015x<52,000+0.02x\\ 55,000-52,000<0.02x-0.015x\\ 3,000<0.005x\\ \frac{3000}{0.005}<x\\ x>600,000\end{array}$

Hence, job offer 2 is better if the number of sales must be more than 600,000