Chapter 5 — Quiz: Compensation
Test yourself on commission structures, the activity-to-income math, and the pay-plan traps. Every answer and a short explanation is hidden in a <details> block — try each question before you peek. Scoring guide at the end.
Multiple Choice (choose the best answer)
Q1. A salesperson is paid 25% of front-end gross with a $150 mini. A deal has $400 of front-end gross. What do they earn?
- A) $100
- B) $150
- C) $400
- D) $40
Answer
**B) $150.** 25% × $400 = $100, which is below the $150 mini, so the mini governs. Any deal under $600 front gross pays the mini on this plan.Q2. Which structure most often accounts for the majority of a strong producer's income?
- A) Flat per-unit pay
- B) The mini
- C) Tiered volume bonuses
- D) The pack
Answer
**C) Tiered volume bonuses.** Especially when retroactive, they re-rate every car at higher unit counts and frequently dwarf the per-deal commission — as the §5.3 productive-struggle showed (bonuses exceeded the per-deal commission).Q3. A "retroactive" volume bonus means:
- A) You get the bonus only on cars sold above each threshold
- B) Once you hit a tier, the bonus rate applies to all cars you sold that month
- C) The bonus is paid the following month
- D) The bonus can be charged back
Answer
**B).** Crossing a tier re-rates every car that month, which is why the marginal car at a tier boundary is the highest-paid car you sell. (A) describes a *marginal* bonus — a different structure you must check for.Q4. The key danger of a recoverable draw is that:
- A) It's illegal in most states
- B) It's an advance you repay from future commissions, so slow months can dig a "hole"
- C) It's smaller than a non-recoverable draw
- D) It's taxed differently
Answer
**B).** A recoverable draw is essentially a loan against future commissions; consecutive slow months create a shortfall that future good months must repay before you see income above the draw. A non-recoverable draw is a true floor you never repay.Q5. A pack added before commission is calculated has what effect on the salesperson?
- A) It increases their commissionable gross
- B) It has no effect on commission
- C) It decreases their commissionable gross, lowering commission
- D) It only affects the customer's price
Answer
**C).** A pack is added to the dealer's *cost*, which lowers the gross on paper, which lowers the commission. It does *not* affect the customer's price — it's an internal accounting line between store and salesperson.Q6. "15 cars/month × ($300 commission + $200 bonus per car)" produces what annual income?
- A) $54,000
- B) $90,000
- C) $135,000
- D) $45,000
Answer
**B) $90,000.** 15 × $500 = $7,500/month × 12 = $90,000. The chapter's benchmark for a competent full-time salesperson.Q7. To convert an income goal into a daily activity target, you need all of the following EXCEPT:
- A) All-in dollars per car
- B) Your closing ratio
- C) Days worked per month
- D) The dealer's holdback percentage
Answer
**D) The dealer's holdback percentage.** Holdback is the *store's* manufacturer money (Ch 1), not part of *your* income math. You need all-in dollars/car, closing ratio, and working days to go from goal → cars → opportunities → opportunities/day.Q8. Carmen out-earns Rick roughly 3-to-1 in the §5.5 worked example despite a lower front-end gross per car. The single largest source of her advantage is:
- A) Her higher front-end commission
- B) The CSI bonus
- C) The retroactive volume bonus (she clears the top tier; he doesn't)
- D) Spiffs
Answer
**C).** The volume bonus gap ($10,000 vs. $1,400) is almost the entire difference, and it exists *because* Carmen sells more cars — which she does *because* she doesn't grind. The back-end gap and CSI add to it, but the retroactive tier is the headline.Q9. A deal where 25% of the gross would pay you less than the minimum commission is called:
- A) A unit deal
- B) A mini
- C) A spiff
- D) A draw deal
Answer
**B) A mini.** And the minimum commission itself is "the mini." Mini deals are common on thin new-car deals, especially near month-end.Q10. Why does the chapter call back-end participation a reward for the help-don't-sell model?
- A) Because back-end gross is illegal to grind
- B) Because customers who trust you (not grind-exhausted ones) buy more products in F&I, raising your back-end pay
- C) Because the back end is always bigger than the front end
- D) Because F&I managers split their pay with salespeople
Answer
**B).** A trusting, well-treated customer arrives in F&I willing to listen and chooses products they actually want; a grind-exhausted, defensive customer buys nothing. On a plan that pays back-end participation, treating customers well literally pays you more.Q11. A salesperson typically sells 13 cars/month on a retroactive plan with a $200 tier at 15 units (vs. $100 at 10–14). Roughly how valuable is getting to 15 in re-rated bonus alone, beyond the cars' own commission?
- A) About $200
- B) About $600
- C) About $1,400–$1,600
- D) Nothing until 20 units
Answer
**C).** At 14 units: 14 × $100 = $1,400 bonus. At 15: 15 × $200 = $3,000. The jump is ~$1,600 of bonus from crossing one tier — which is why veterans work for "one more" at month-end. (Exact figure depends on whether you count from 13 or 14, but it's in the $1,400–$1,600 range.)True / False (give a one-line justification)
Q12. A pack directly raises the price the customer pays. T / F
Answer
**False.** A pack is added to the dealer's *cost* before computing the salesperson's commission; it's internal and doesn't change the customer's price. (Don't confuse it with *payment packing* on the customer, which is a separate, unethical practice — Ch 30.)Q13. On a percentage-of-gross plan, grinding more front-end gross out of every customer is always the highest-earning strategy. T / F
Answer
**False.** §5.5 proves the opposite: grinding costs volume, back-end participation, CSI, and referrals, and the front-end gain is often eaten by the mini anyway. The consultative model out-earned the grind 3-to-1.Q14. A non-recoverable draw must be paid back out of future commissions. T / F
Answer
**False.** That describes a *recoverable* draw. A non-recoverable draw (or guarantee) is a true floor you keep regardless of commission and never repay.Q15. CSI bonuses mean a dealership will sometimes pay you money directly for treating customers well. T / F
Answer
**True.** A CSI bonus ties pay to your customer-satisfaction score — Theme #3 (ethics are profitable) printed right on the pay stub. A low score can also cost you money.Q16. Most salespeople can accurately explain their own pay plan. T / F
Answer
**False.** The chapter's premise is that most can't — which is exactly why the few who can have an advantage: they can *aim* their effort at the highest-paying activities.Short Answer (2–4 sentences)
Q17. Write the backward activity-to-income formula in full (goal → cars → opportunities → per day), and explain in one sentence why the "per day" number matters more than the income goal.
Answer
Cars/month = (Annual goal ÷ 12) ÷ all-in dollars per car. Opportunities/month = cars ÷ closing ratio. Opportunities/day = that ÷ working days. The per-day number matters more because you can't *control* income today, but you *can* control how many real opportunities you create today — and stacking the controllable inputs produces the income.Q18. Explain the difference between a recoverable and non-recoverable draw, and state which one a smart new hire should prefer and why.
Answer
A recoverable draw is an advance against future commissions — you repay shortfalls, so slow learning-curve months can dig a "hole." A non-recoverable draw is a true floor you keep regardless and never repay. A new hire should strongly prefer non-recoverable (or at least a non-recoverable *guarantee* for the first 60–90 days), because it prevents the learning curve from becoming a debt that drives people to quit in month four.Q19. Why is it worth recomputing your own commission check every month from the plan?
Answer
Because it's the only way to *audit* your pay — pay errors do happen, and a salesperson who can't recompute their check can't catch them. It also forces you to truly understand the plan (minis, tiers, back-end rates), which is what lets you aim your effort. Carmen catches an error roughly twice a year doing this — real money.Q20. A store offers "25% of gross" but won't tell you the pack amount when you ask. What should you conclude, and why?
Answer
Be cautious. A modest, *disclosed* pack is a normal, defensible business practice — but evasion about how the store calculates *your own pay* is a red flag. A store that hides the math on your paycheck is unlikely to be transparent elsewhere, with you or with customers. Get the pack in writing before you sign.Applied Scenario
Q21. A salesperson on the sample Summit plan (25% front + 5% back; $150 mini; retroactive tiers $100/$200/$300/$400 at 10/15/20/25; $500 CSI if above target) sells 20 cars this month. Average front-end gross $400/car; average back-end gross $1,200/car; CSI above target; no spiffs. Compute their total income, step by step, and state how much came from bonuses vs. per-deal commission.
Answer
- **Front commission:** 25% × $400 = $100/car, which is *below* the $150 mini → each deal pays $150. 20 × $150 = **$3,000.** - **Back commission:** 5% × $1,200 = $60/car. 20 × $60 = **$1,200.** - **Volume bonus (retroactive):** 20 units → $300/car tier, all 20 → 20 × $300 = **$6,000.** - **CSI bonus:** above target → **$500.** - **Total = $3,000 + $1,200 + $6,000 + $500 = $10,700.** Of that, **per-deal commission = $4,200** ($3,000 front + $1,200 back) and **bonuses = $6,500** ($6,000 volume + $500 CSI). Bonuses were the majority — and the front-end was governed by the mini, not the percentage. Anyone who thinks "I'm paid 25% of gross" has the wrong mental model.Q22. Same plan and same month as Q21, but the salesperson sold only 19 cars (one short of the 20-unit tier). Recompute the volume bonus and total, and state the dollar cost of being one car short.
Answer
- At 19 units, they're in the **15–19 tier at $200/car** (not $300): 19 × $200 = **$3,800** volume bonus. - Front: 19 × $150 = $2,850. Back: 19 × $60 = $1,140. CSI: $500. - **Total = $2,850 + $1,140 + $3,800 + $500 = $8,290.** - Versus 20 cars ($10,700, but that included one more car's $150 + $60 = $210 of commission). Stripping that out, the *bonus-and-tier* effect of the 20th car: the 20th car raised the bonus from $3,800 to $6,000 — a **$2,200 swing** — plus its own $210 commission. So the 20th car was worth about **$2,410** total. That single unit at the tier boundary was worth more than ten average cars' front-end commission. The cliff effect, in one number.Scoring Guide
- 20–22 correct (90%+): Excellent. You can decode a plan, run the activity math both directions, and spot the traps. Build your own model in the Project Checkpoint and move to Chapter 6.
- 16–19 correct (70–89%): Solid. Re-read §5.4 (the math) and §5.6 (the draw) for any you missed, then proceed.
- 11–15 correct (50–69%): Re-read §5.2 (the five structures), §5.4 (activity-to-income), and §5.5 (Carmen vs. Rick). Re-work the Part B exercises before continuing.
- Below 11 (under 50%): Re-read the chapter with a calculator and your own (or the sample) pay plan in hand, working every boxed calculation yourself. This chapter is the financial backbone of your career — it's worth a second pass.
A passing score is 70%+ (16/22). But the real test isn't this quiz — it's whether you can decode your actual pay plan and build your actual income model in the Project Checkpoint. Go do that.