Future Business Leaders of America (FBLA) Accounting Practice Test

Which of the following refers to payment based on sales performance?

1. A flat rate

2. Commission

3. Salary

4. Piece rate

The correct answer is: Commission

The correct choice is commission, which is a payment structure commonly used in sales and marketing positions. Commissions are typically calculated as a percentage of the sales revenue generated by an employee, incentivizing them to sell more. This system aligns the interests of the employee with those of the company, as employees are rewarded directly for their performance and ability to drive sales. In contrast, a flat rate provides a consistent amount regardless of performance and does not encourage additional effort. A salary is a fixed amount paid regardless of productivity or sales performance, which may not effectively motivate employees in sales roles. Piece rate refers to payment based on the number of units produced or completed, typically used in manufacturing or production settings, rather than sales. Therefore, commission is the most accurate term to describe payment based on sales performance, promoting a results-oriented approach that can boost overall sales and employee motivation.