Saturday, March 2, 2024

# How To Solve Commission Math Problems

## How To Find Commission Rate In 5 Steps

Mathematics: How to Calculate Commission (examples)

Salespeople often work on a commission-only basis in which their employer pays them a certain percentage or fixed rate when they make a sale. If you work in sales, knowing how to calculate your commission rate will tell you how much you will make per sale and how many sales you’ll need to make to meet your financial goals. In this article, we discuss what a commission rate is, the different types of commission and how to find your commission rate in five easy steps.

## Base Salary With Commission

A base salary is a certain amount of money guaranteed. The base salary and the commission are combined for the total amount of money the person will make.

In the example above where the sales person made \$400 in commission. If this person received a base salary of \$300 their total amount made would be \$700 .

## Learn About Calculating Commission With The Following Examples And Interactive Exercises

Example 1: The Stettnisch family’s house was sold for \$300,000. How much money will they have after they pay their real estate agent a 5% commission?

Analysis: Commission is paid to an employee or company as an incentive to sell more. A commission is generally a of sales. The real estate agent was hired by the Stettnisch family to sell their house for a 5% sales commission.

Solution: * = \$15,000 and \$300,000 – \$15,000 = \$285,000

Answer: The Stettnisch family will have \$285,000.00 after they pay their real estate agent.

A commission may be paid in addition to a salary or in lieu of a salary. However, in this lesson we will compute only. Let’s look at some more examples of straight commission.

Example 2: A stock broker receives a commission of 11% for selling annuities to her clients. If she sells \$50,000 in annuities, how much commission will she earn?

Solution: * = \$5,500

Answer: The stock broker will earn \$5,500.00.

Example 3: The Jones family purchases \$350,000 in life insurance from an insurance broker. How much will they pay the insurance broker if she charges a 0.5% commission?

Solution: * = \$1,750.

Answer: The Jones family will pay their insurance broker a commission of \$1,750.00.

Example 4: A car salesman earns a 3% commission on sales. If he sells a car for \$27,990, how much commission will he earn?

Solution: * = \$839.70

Answer: The car salesman will earn a commission of \$839.70.

## Example Of A Commission Calculation

The commission plan of Mr. Smith is to earn 4% of all sales, less any returned merchandise. If he reaches \$60,000 in sales by the end of the quarter, the commission retroactively changes to 5%. In the first quarter, he has \$61,500 of sales, less \$500 of returned merchandise. Thus, the calculation of his commission for the entire quarter is:

\$61,000 Net sales x 5% Commission rate = \$3,050

## Solve Sales Tax Applications

Sales tax and commissions are applications of percent in our everyday lives. To solve these applications, we will follow the same strategy we used in the section on decimal operations. We show it again here for easy reference.

HOW TO: Solve an application

• Step 1. Identify what you are asked to find and choose a variable to represent it.
• Step 2. Write a sentence that gives the information to find it.
• Step 3. Translate the sentence into an equation.
• Step 4. Solve the equation using good algebra techniques.
• Step 5. Check the answer in the problem and make sure it makes sense.
• Step 6. Write a complete sentence that answers the question.

Remember that whatever the application, once we write the sentence with the given information , we can translate it to a percent equation and then solve it.

Do you pay a tax when you shop in your city or state? In many parts of the United States, sales tax is added to the purchase price of an item. See Figure \. The sales tax is determined by computing a percent of the purchase price.

To find the sales tax multiply the purchase price by the sales tax rate. Remember to convert the sales tax rate from a percent to a decimal number. Once the sales tax is calculated, it is added to the purchase price. The result is the total costthis is what the customer pays.

Figure \ – The sales tax is calculated as a percent of the purchase price.

Definition: sales tax

7.5%

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## Dalton State Partners With Industry To Solve Real

#### 04/04/18

Math was the subject in school with an absolute answer, but what math majors come to realize is that real-life math isnt always that straight forward.

In actuality, math can be messy and complex and many times theres not one single solution to a problem. Fernando Cedano and Karina Rangel, who are participating in a specialized course at Dalton State that gives math majors real-world experience, are learning that first-hand.

Students in the course work with area industries to solve actual problems. The class also allows industries to have problems reviewed and solved by mathematicians. This is the second semester Dalton States math department has partnered with industry to provide the course.

People dont realize that higher math is actually collaborative, said Dr. Nicholas Gewecke, an assistant professor of mathematics. One person doesnt necessarily have all the knowledge needed to solve a complex problem. So were working together. A lot of times with math we think students learn the material just to reproduce it on a test, but theres more to it than that. You have to have that knowledge base so thats why we do individual testing, but we actually work together in higher math.

Opportunities like this are important for math majors to reveal there are more careers out there than teaching math. But often, the jobs arent labeled mathematician, Gewecke said.

Currently, the students are learning more about math-based computer programming.

Your commission rate is paid in one of two ways: percentage of sales or dollar amount per sale. Each of the two types of commission payments changes the master formula slightly. Those who earn a percentage multiply their total sales revenue by their commission percentage rate, while those who earn a dollar amount multiply their number of sales by their predetermined dollar amount.

Percentage model: + – = Income

Dollar amount model: + – = Income

## Earnings And Remuneration Methods

Using this graphic organizer , summarize what you have learned about the different remuneration methods. The graphic organizer is divided into four parts:

• Definition – In your own words, describe the remuneration method
• How to Calculate – Write out the steps required to calculate a worker’s pay
• Example – Write a sample problem and show how you solved it
• Non-Example – Write a problem that is not an example of this remuneration method and explain why it isn’t

The graphic organizer below shows a summary of the Job Rate remuneration method.

Graphic Organizer for Job Rate

Complete a graphic organizer for the following four remuneration methods: hourly wage, hourly wage plus overtime, commission and commission plus salary.

## Base Plus Commission With Percentage Model

Math 6 Week 4 – 2nd Quarter / MELC Solving Problems Involving Commission

You work as a car salesperson at a dealership and rely on a base salary plus commission to generate an income. Your commission rate is 25% of the gross profit of each car sold. The average gross profit from a car is \$1,500. Your base salary is \$2,800 per month. Your desired monthly income is \$10,000.

*Percentage model: + – = Income*

• You make \$2,800 in base salary, so input “2,800” into “Base salary.” + – = Income

• You are lent \$0 from your employer, so input “0” into “Advance pay.” + – = Income

• Your commission rate is 25%, so input “0.25” into “Commission rate percentage.” + – = Income

• The average gross profit from a car at your dealership is \$1,500, so input “1,500” into “Sales revenue.” + – = Income

• Use this formula to calculate your income after one car sale. + – = \$3,175 income from one car sale plus one month salary

• Subtract your base salary from the above figure to calculate your commission per car sale.3,175 – 2,800 = \$375 commission per car sale

• You have a desired monthly income of \$10,000 and make a base salary of \$2,800, so start by subtracting 2,800 from 10,000.10,000 – 2,800 = 7,200

• Now divide 7,200 by 375 to find out how many car sales you need to make each month for your desired income of \$10,000.7,200 / 375 = 19.2 car sales per month for desired income

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## How To Calculate Commissions Using Percents

• B.B.A., Finance and Economics, University of Oklahoma

Percent means “per 100” or “of each hundred.” In other words, a percent is a value divided by 100 or a ratio out of 100. There are many real-life uses for finding the percentage. Real estate agents, car dealers, and pharmaceutical sales representatives earn commissions that are a percentage, or part, of sales. For example, a real estate agent might earn a portion of the selling price of a house that she helps a client purchase or sell. A car salesperson earns a portion of the selling price of an automobile that she sells. Working real-life percentage problems can help you better understand the process.

## Real Estate Math Formulas Practice Questions & Examples

Real estate math is an essential part of the real estate exam and an important concept to understand to have a successful real estate career. Becoming an expert at math and being able to do real estate math problems can help you stand out in your market and become a better real estate agent and can make it much easier to pass the real estate exam.

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• A real estate agent received a 6% commission on the selling price of a house. If his commission was \$8,880, what was the selling price of the house?

• An electric motor makes 3,000 revolutions per minutes. How many degrees does it rotate in one second?
• The area of a rectangular field is equal to 300 square meters. Its perimeter is equal to 70 meters. Find the length and width of this rectangle.
• The area of thetrapezoid shown below is equal to 270 square units. Find its perimeter and round your answer to the nearest unit.
• If a tire rotates at 400 revolutions per minute when the car is traveling 72km/h, what is the circumference of the tire?
• In a shop, the cost of 4 shirts, 4 pairs of trousers and 2 hats is \$560. The cost of 9 shirts, 9 pairs of trousers and 6 hats is \$1,290. What is the total cost of 1 shirt, 1 pair of trousers and 1 hat?
• Four children have small toys. The first child has 1/10 of the toys, the second child has 12 more toys than the first, the third child has one more toy of what the first child has and the fourth child has double the third child.How many toys are there?
• A class average mark in an exam is 70. The average of students who scored below 60 is 50. The average of students who scored 60 or more is 75. If the total number of students in this class is 20, how many students scored below 60?
• For what value of x will the function f = -3 have a maximum value? Find the maximum value.
• ## Straight Commission With Dollar Amount Model

You work as a phone salesperson who sells one vacation product, and you rely solely upon commission to generate an income. Your commission rate is \$125 per product sale. Your desired monthly income is \$10,000.

*Dollar amount model: + – = Income*

• You make \$0 in base salary, so input “0” into “Base salary.” + – = Income

• You are lent \$0 from your employer, so input “0” into “Advance pay.” + – = Income

• Your commission rate is \$125 per sale, so input “125” into “Dollar amount.” + – = Income

• Insert “1” into “Number of sales” and use this formula to calculate your income after one vacation product sale. + – = \$125 per product sale

• You have a desired monthly income of \$10,000, so divide 10,000 by 125 to find out how many sales you need to make each month.10,000 / 125 =80 vacation package sales per month for desired income

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## How Is Math Used In Real Estate

While you may not need to use math every day as a real estate agent, you should be prepared when problems arise that require a thorough understanding of real estate math concepts. Examples of math concepts that real estate agents must know are as follows:.

• Measurement Conversions: Measurements including area measurements, linear measurements, and volume measurements
• Fractions, Decimals, & Percentages: These include understanding The T-Bar Method or how to solve percentage problems
• Real Estate Math Formulas: Math formulas help you solve problems you’ll encounter frequently as an agent. These include the Gross Rent Multiplier Formula, the Commission Formula, Simple Interest Formula, Loan to Value Ratio , and more.

## What Is Commission Rate

Commission rate is the payment associated with either a fixed payment or percentage of a sale. Professions that work on commission, such as insurance brokers, real estate agents and car salespeople, receive payments when they produce a sale. When your income is based partially or entirely on the number of sales, calculating the commission rate becomes critical to the job.

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#### Why do sales make so much?

• You might have unlimited earnings potential.
• You know exactly how well you’re doing.
• You’ll probably work more independently.
• Your income can fluctuate greatly.
• You might be seen as high-risk.
• The turnover rate for your work may be greater.

#### Is straight commission good?

• Make a schedule for the month.
• Total up each employee’s hours for the month.
• Add all employees total hours, then multiply the total hours by 90%.
• Divide your total store goal by that figure.

#### How do you get paid by commission?

• Bonus Commission.

% COMMISSIONS EXPLAINED IN 5 MINUTES | Word Problem with Interest | Exponential Growth
• 1Find out what your commission is based on. Typically, commissions are paid based on the purchase price of goods and services that you sold. However, some companies use different commission bases, like the items net profit or the items cost to the company.XResearch source
• Ask if there are any products or services excluded from the commission plan. A company may pay you a commission for selling certain products and services but not others.
• 2Determine the commission rate that your company pays. The commission payment rate could be, for example, 5% of the selling price of all goods sold. Alternatively, your company might offer a flat commission rate .XResearch source
• The company may set different commission rates for different types of products. For example, it may pay 6% commission on a product thats hard to sell and only 4% commission on a product thats easy to sell.
• 3Learn about any other nuances in your commission plan. For example, in some plans, your commission rate changes after you sell a certain amount of product or if you reach a specific quarterly goal. This is called an override.XResearch source
• In a tier-based commission system, for example, your commission rate might increase to 7% after you sell \$50,000 worth of product.
• Some commission plans may involve splitting the commission if you make a sale or complete a project jointly with another employee.
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Companies that use the base plus commission model pay their salespeople a base salary, in which you insert your weekly, monthly or yearly salary in the “base salary” area of the master formula. Salespeople who work for companies that use the straight commission or draw against commission models enter “0” as their base salary.

• 1Take split commissions into account. Split commissions are when more than one salesperson is involved in a sale and they share the commission. Alternatively, a regional sales manager may receive part of the commission of the salespeople in their region.XResearch source

Did you know? Split commissions are common in real estate transactions. Real estate brokers frequently split their commissions with 1 or more agents involved in the sale of a property.XResearch source

• 2Assess any additional bonus structures or related incentives. In addition to a straight percentage, a commission structure also can include any number of more complicated incentives for a salesperson or other commission-earning individual.
• For example, if you know that your commissions were the top-scoring numbers for a department or team, you may be eligible for top-performance bonuses.
• 3Be prepared to lose commissions based on returns. Depending on your commission plan, your company may subtract money from your commission if merchandise or services you sold are returned or refunded. You may also lose commission money if payment for your services cant be collected for some other reason .XResearch source
• For example, if you sold \$30,000 worth of merchandise during your commission period, but customers return \$600 worth of that merchandise, \$600 may be subtracted from your commission base.
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## How To Calculate Commission

This is a very basic calculation revolving around percents. Just take sale price, multiply it by the commission percentage, divide it by 100. An example calculation: a blue widget is sold for \$70. The sales person works on a commission – he/she gets 14% out of every transaction, which amounts to \$9.80.

So the formula is: commission_amount = sale price * commission_percentage / 100.

So now you know how to calculate commission. Now that you have this figure, there’s a problem of who will cover this cost – usually it’s the selling party . To calculate their revenue, we need to calculate the percentage decrease: real_revenue = sale_price – sale_price * commission_percentage / 100. In our example, it’s \$70 – \$70 * 14 / 100 = \$70 – \$9.80 = \$61.20.

It’s not very common, but sometimes it’s the buyer who pays for the sales person’s remuneration. In those cases we need the percentage increase formula: price_with_commission = base_price + base_price * commission_percentage / 100. In our example, it’s \$70 + \$70 * 14 / 100 = \$70 + \$9.80 = \$79.80.