Which plan provides the best pay for top performers

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Reference no: EM132255863

Graph (by hand, neatly) two compensation plans, PLAN A and PLAN B (described below), with:

“Salesperson’s $ sales for the year” on the X (horizontal) axis, ranging from $0 to $1,000,000, and

“Salesperson’s $ pay for the year” on the Y (vertical) axis, ranging from $0 to $120,000

PLAN A: $40,000 guaranteed salary plus 6% commission on sales

PLAN B: $60,000 guaranteed salary, plus a $10,000 bonus for reaching $400,000 in sales for the year, plus another $10,000 bonus for reaching $800,000 in sales for the year

Answer the following:

Which plan provides the best pay for top performers? For low performers? For middling performers?

If you were newly employed as a medical device salesperson for ABC Medical, which incentive plan would youprefer? Why?

Reference no: EM132255863

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