Computation Method 3 (Cumulative Pro-Rata) - Multiple Breakpoints

The system uses the same steps as those described for the calculation using a single breakpoint, but also calculates the amounts for the each subsequent breakpoint amount using the formula: {[(difference between breakpoint amounts) × (corresponding breakpoint percentage)] / 12} × (period number)

Period 01: 400.42

The system calculates the sales overage amount using the highest breakpoint first, which in this example is the third breakpoint (40,000) because the cumulative annualized sales amount (15,000 × 12) is greater than 40,000.

{[(15,000 × 12) / (1 + 1000 − 40,000)] ×.03} ÷ 12 × 1 = 352.50

The system calculates the sales overage amounts for each subsequent breakpoint:

[(40,000 − 20,000) × 0.04] ÷ 12} ×1 = 66.67{[(20,000 − 500) × 0.05] ÷ 12} ×1 = 81.25

The system sums the sales overage amounts for each breakpoint, subtracts the gross prior billings, and then subtracts the recapture amount.

352.50 + 66.67 + 81.25 − 100 = 400.42

Period 02: 650.41

The system calculates the sales overage amount using the highest breakpoint first:{[(35,000 × 12) / 2 + 1000 − 40,000] x 0.03}/ 12 × 2 = 855.00

The system calculates the sales overage amounts for each subsequent breakpoint: {[(40,000 – 20,000) × 0.04] ÷ 12} ×2 = 133.33{[(20,000 – 500) × 0.05] ÷ 12} ×2 = 162.50

The system sums the sales overage amounts for each breakpoint, subtracts the gross prior billings, and then subtracts the recapture amount.

855.00 + 133.33 + 162.50 − 400.42 − 100 =650.41

Period 03: 800.42

The system calculates the sales overage amount using the highest breakpoint first:

{[(60,000 × 12) ÷ 3 + 1,000 − 40,000]Form ID03} / 12 × 3 = 1,507.50

The system calculates the sales overage amounts for each subsequent breakpoint:

{[(40,000 – 20,000) × 0.04] ÷ 12} ×3 = 200.00{[(20,000 – 500) × 0.05] ÷ 12} ×3 = 243.75

The system sums the sales overage amounts for each breakpoint, subtracts the gross prior billings, and then subtracts the recapture amount.

1507.50 + 200.00 + 243.75 − 400.42 − 650.41−100 = 800.42