Problem Solving

BTGmoderatorDC wrote:John and Ed work for the same Sales Company. John receives a $600 basic salary plus 20 percent of any profit he realizes for the company in excess of $5,000, while Ed receives an $800 basic salary in addition to 40 percent of any profit he realizes for the company only if the total profit he realizes is greater than $8,000, otherwise he receives a flat salary of $1,000. For what amount of profit will both John and Ed earn the same amount?

A. $1,000
B. $1,200
C. $2,400
D. $6,000
E. $7,000

We can PLUG IN THE ANSWERS, which represent the amount of profit.

Since Ed earns a flat salary of $1000 if the amount of profit does not exceed $8000 -- and all of the answer choices are less than 8000 -- Ed's earnings = $1000.
Since John and Ed must earn the same amount, John must also earn $1000.

John earns a $600 base salary plus 20% of any profit in excess of $5000.
Thus, for John to earn $1000, the correct answer must be greater than 5000.
Eliminate A, B and C.
When the correct answer is plugged in, the amount of profit in excess of $5000 will yield John an additional $400 on top of his $600 base salary, bringing his total earnings to $1000.

D: 6000, implying $1000 profit in excess of $5000
Additional earnings for John = 20% of $1000 = 200.
Too small.
Eliminate D.

The correct answer is E.

E: 7000, implying $2000 profit in excess of $5000
Additional earnings for John = 20% of $2000 = 400.
Success!