Calculation for Natural Breakpoint

Based on the setup information, the system calculates the natural breakpoint: 72,000 ÷/ .40 = 180,000

Using the natural breakpoint, the system calculates the sales overage amounts for each period:

Period 01: 0

The equation is: (accumulated period sales) × (growth pattern)

For example: 50,000 × 1.10 = 55,000

Because 55,000 is less than the natural breakpoint (180,000), the system does not calculate a sales overage amount. The system uses a growth pattern of 1.10 to represent 10 percent because the period sales should include the calculated growth pattern amount.

Period 02: 0

The equation is: (accumulated period sales) × (growth pattern)

For example: 110,000 × 1.10 = 121,000

Because 121,000 is less than the natural breakpoint (180,000), the system does not calculate a sales overage amount.

Period 03: 7,100

The equation is: (accumulated period sales) x (growth pattern)

For example: 180,000 × 1.10 = 198,000

Because 198,000 is greater than the natural breakpoint (180,000), the system calculates the sales overage amount: [(198,000 – 180,000) × .40 (breakpoint)]− 100 (recapture ÷ 12) = 7,100

Period 04: 35,200

The equation is: (accumulated period sales) x (growth pattern)

For example: 260,000 × 1.10 = 286,000[(286,000 − 180,000) × .40 (breakpoint)]− 7,100 (prior gross billings) − 100 (recapture) = 35,200