Kaplan QR Question

[LazyP]

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Mrs. Parson's gross salary is $250 per week. If her employer deducts 15% from the first $10,000 earned in a year, and 20% from earnings between $10,000 and $15,000 in a year, how much money does Mrs. Parson take home in one year (52 Weeks)?

A) $2,100
B) $10,900
C) $11,050
D) $11,540
E) $12,650

The answer is B.

Explanation:

Mrs. Parson's total yearly salary before taxes is 52 x $250 = $13,000. Of the first $10,000, she loses $1,500 so she earns $8,500 from the first $10,000. (Here is where I got severely confused...) Of the next $3000 she takes home $3,000-(20% x $3,000) = $2,400. So here total take is $10,900.

My question, why did they use $3,000 for the 20% when it clearly states "20% from earnings between $10,000 and $15,000 in a year". I mean I can see what they meant by the explanation but clearly the question implies actual earning between 10K to 15K not the difference! Can someone please tell if this type does actually pop up on the exam or if it was just me. I know I know Kaplan sucks but I wanted to use the resources I have to practice.

 

[J777]

(1) First $10,000:

It takes her 40 weeks to make $10,000 (40wks x $250/week = $10,000). They deduct %15 of the first $10,000.. %15 of 10,000 = 1500. The take home amount after deductions is $10,000 - $1500 = $8500

(2) $10,000 to $15,000:

There are 12 weeks remaining in the year (52 weeks - 40 weeks = 12 weeks). She will make 12 weeks x $250/week = $3000 in those 12 weeks. Since they deduct %20 from any amount between $10K-$15K, they will deduct %20 of $3000 = $600 from that $3000 (i.e. the take home is $3000-$600 = $2,400)

Add (1) and (2) to get the total amount she takes home in one year: $8500 + $2400 = $10,900

 

[FeralisExtremum]

My question, why did they use $3,000 for the 20% when it clearly states "20% from earnings between $10,000 and $15,000 in a year".

Because when you make $13,000 in a year, and you are taxed 20% on the earnings between $10,000 and $15,000, that 20% only applies to $3000 (the amount past the $10k threshold).

 

[LazyP]

Okay I got that now when they say "between" you only tax on the extra amount she earned above 10,000 with the limit being 5000. The wording is tripping me on questions like these. Gracias!

 

[john216]

I don't get the second part.
The question says take 20% off only if the amount is between 10K - 15K.
But only $3K is earned those 12 weeks.
Since 3K is not between 10 K- 15K, shouldn't we just ignore the deduction?

 

[J777]

I don't get the second part.
The question says take 20% off only if the amount is between 10K - 15K.
But only $3K is earned those 12 weeks.
Since 3K is not between 10 K- 15K, shouldn't we just ignore the deduction?

It is $3000 after the initial $10k. In other words, they are deducting %20 from every dollar earned between $10K and $13K