Multiple Choice
If a business has revenues of \$1,000 and a gross profit of \$200, what is the amount of its net sales, assuming there are no sales returns or allowances?
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4. Merchandising Operations
Net Sales
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Which of the following is a benefit of being an employee paid on commission?
A
Guaranteed fixed salary regardless of sales
B
Income is not affected by market demand
C
Potential to earn more income based on performance
D
No need to meet sales targets
Verified step by step guidance1
Understand the concept of commission-based pay: Commission-based pay means an employee earns income based on their performance, typically tied to sales or specific achievements.
Analyze the options provided: Evaluate each statement to determine if it aligns with the characteristics of commission-based pay.
Option 1: 'Guaranteed fixed salary regardless of sales' - This does not apply to commission-based pay, as income is variable and depends on performance.
Option 2: 'Income is not affected by market demand' - This is incorrect because commission-based pay is often influenced by market demand and sales performance.
Option 3: 'Potential to earn more income based on performance' - This is a key benefit of commission-based pay, as employees have the opportunity to increase their earnings through higher performance.
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