Pedro works as a salesman of ZZZ Trading. The agreement between Pedro and ZZZ provides the following terms: 

 

Basic Salary                                                    P25,000

5% commission on every sale

Incentive upon meeting of target                    15,000

 

Pedro made a total sales of P250,000 for the month. Incidentally, during the month, Pedro received a P50,000 commission from selling his friend's vacant lot.

 

How much is the regular compensation income of Pedro?

P25,000

P40,000

P52,500

P102,500

The answer is choice A (P25,000)

To understand why this is the answer, look at the explanation below. 
 

Step-by-step explanation

In responding to this question, it is important to understand what is meant by regular compensation. This refers to the wages that an employee receives from an employer for the services performed in the course of the employment.

Additionally, it is important to note that regular compensation includes the base salary and does not include incentives, bonuses, or commissions earned by the employee.

In this case, Pedro has a base salary of P25,000. The other compensations he received were in the form of incentives and commissions and these are not included as regular compensation.

This is why his regular compensation will be only his base salary which is P25,000.