The Chocolate Industry
Lindt vs Ferrero Rocher
Which Company is Better?
Variables
Dependent variable: Total pay ($)
Which pay is better?
Ferrero Rocher
- Fixed salary of $200
- 15% commission
Knowing this we can make an equation saying:
Total pay = $0.15 (sales) + $200
At $200 the coordinates on a graph will be (0,200) which means $200 is the y Intercept
With the equation, Total pay = $0.15 (sales) + $200 we can see that the slope is 0.15
To prove this:
Slope = (y2 - y1)/( x2 - x1)
The coordinates that can be used are (0,200) and (300, 245)
= (245 - 200)/(300 - 0 )
= 45/300
= 0.15
Therefore the slope is 0.15
Lindt
- Fixed salary of $250
- 10% commission
Knowing this we can make an equation saying:
Total pay = $0.10 (sales) + $250
At $250 the coordinates on a graph will be (0,250) which means $250 is the y Intercept
With the equation, Total pay = $0.10 (sales) + $250 we can see that the slope is 0.10
To prove this:
Slope = (y2 - y1)/( x2 - x1)
The coordinates that can be used are (0,250) and (300, 280)
= (280 - 250)/(300 - 0 )
= 30/300
= 0.10
Therefore the slope is 0.10
Point of Intersection
Ferrero Rocher: Total pay = $0.15 (sales) + $200
Lindt: Total pay = $0.10 (sales) + $250
This means:
$0.15 (sales) + $200 = $0.10 (sales) + $250
To find the x coordinate, we now have isolate sales
$0.15 (sales) + $200 = $0.10 (sales) + $250
$0.15 (sales) - $0.10 (sales) = $250 - $200
0.05 (sales) = 50
sales = 50/0.05
sales = $1000
This means the x coordinate is 1000
To check if we were right we can substitute 1000 for the value of sales
$0.15 (sales) + $200 = $0.10 (sales) + $250
$0.15 (1000) + $200 = $0.10 (1000) + $250
$150 + $200 = $100 + $250
$350 = $350
To find the y coordinate (total pay) we have to substitute the x vale (1000) into one of the equations:
Total pay = $0.15 (sales) + $200
Total pay = $0.15 (1000) + $200
Total pay = $150 + $200
Total pay = $350
This means the y coordinate is 350
Therefore the point of intersection for Ferrero Rocher and Lindt is (1000, 350)
Conclusion
If Rachel sells an average amount of less than $1000 then she should work at Lindt because they offer more money. If Rachel sells more than $1000 she should work at Ferrero Rocher because they offer a higher amount of money.
Doing this helps us decided the right decision to make when dealing with money. With an offer like this at first you would think the work that offers more for a salary is better than the one that sells less. Graphing out the two possibilities help one decide what is better.