3. Which of the following best describes a method of paying an employee based on the amount of sales the employee generates?

• A. Commission
• B. Hourly wage
• C. Bonus
• D. Salary

Answer: (A)

Verified step by step guidance

1. Understand the concept of commission: Commission is a method of compensating employees based on the amount of sales they generate. It is typically expressed as a percentage of the sales revenue.
2. Compare commission with other payment methods: Hourly wage compensates employees based on the number of hours worked, salary provides a fixed periodic payment, and bonus is an additional payment often tied to performance but not directly linked to sales.
3. Identify the key characteristic of commission: It directly ties the employee's earnings to their sales performance, incentivizing them to generate more sales.
4. Analyze the question: The question asks for the payment method that is based on the amount of sales generated, which aligns with the definition of commission.
5. Conclude that commission is the correct answer, as it best describes the method of paying employees based on sales performance.