What Are The Three Different Types Of Commission
- COMMISSIONS. Straight | Graduated | Piecework | End of Page.
- Straight Commission. Straight Commission is calculated to be the persons wage based solely on sales.
- Graduated Commission. Graduated Commission is calculated into a persons pay in addition to his/her regular salary or wage.
- Piecework Commission.
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.
The Following Are Some Reminders In Using This Module:
1. Use the module with care. Do not put unnecessary mark/s on any part of the module. Use a separate sheet of paper in answering the exercises. 2. Dont forget to answer What I Know before moving on to the other activities included in the module.
What I Need to Know
This module is made to help you know the different types of commissions andhow you are going to compute for those commissions in a cash and installment basis.
Our goal in this module is to assist you so that you can analyze wordproblems, compute problems involving commissions and apply it in a real-lifescenario. Together, we will make a detailed study and practice lots of activities.
Also Check: Step Functions In Algebra 2
Understanding Your Commission Plan
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
Don’t Miss: What Is L In Physics
What Is The Difference Between Profit And Commission
Some employees also earn a commission which we learned the company calculates as a percentage of total sales that the employee makes. And finally we learned that the difference between revenue and expenses is called profit and it helps a business determine if its products and services are priced properly.
How To Calculate Commission
This article was co-authored by Michael R. Lewis. Michael R. Lewis is a retired corporate executive, entrepreneur, and investment advisor in Texas. He has over 40 years of experience in business and finance, including as a Vice President for Blue Cross Blue Shield of Texas. He has a BBA in Industrial Management from the University of Texas at Austin. This article has been viewed 538,725 times.
While many employees are paid on an hourly or salaried basis, commissioned employees are paid based on the value of goods and services that they sell. Commission-based payment is common in certain positionssales in particularwhere bringing in money is an important part of the job. To calculate commission, you need to understand what system your business uses and any additional factors that may affect your total commission earnings.
Recommended Reading: What Is Nu In Chemistry
Business Mathematics Problems And Solutions
Question 1: A music system was bought for Rs.10,500 and sold at Rs.9,500. Find the amount of profit or loss.
Cost Price of the music system = Rs.10,500
Selling Price of the music system = Rs. 9,500
We can see here, C.P. is greater than S.P. Therefore, there is a loss in this business.
Hence, we need to calculate the loss amount.
Loss = C.P. S.P.
Loss = 10,500 9,500 = Rs.1,000/-.
Question 2: A pair of shoes is bought at Rs 200 and sold at a profit of 10%. Find the selling price of the shoes.
P = × 200 = Rs. 20
S.P. = C.P. + Profit
S.P. = 200 + 20 = Rs.220/-
Question 3: If the cost price of an article including 20% for taxes is Rs. 186, then find the original cost of the article excluding taxes.
Let x be the original price of an article.
Tax = 20% of x = × x = 0.2x
According to the given statement,
Original cost + tax = New cost price
x + 0.2x = Rs. 186
Making Adjustments As Necessary
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
Don’t Miss: What Is Vector Quantity In Physics
What Is Meant By Straight Commission Plan
What is Straight Commission Plan? This is a form of salesforce compensation. In this no fixed salary is paid to the employee. Instead the salesperson is paid a percentage of the total sales he/she has achieved. It is a measure of his/her performance rather than the number of hours put in at the job.
Illustrate Different Types Of Commissions
Ms. Katrina Perez is a sales agent at Toyota Bataan Branch. The companyoffers her a commission of 3.5% in every car that she will sell. Last June, the BataanBranch celebrated their 5th year and added 2% commission on all its employeesincluding Ms. Perez. Luckily, she sold an Innova car that costs Php1,538,000 on thatmonth. The company also ensures that the employees have their monthly salary ofPhp12,000 with or without a sale.
You May Like: How To Study Ap Human Geography
Harry Gets A Gross Pay Of 51128
c. Graduated Commission calculated into a person’s pay in addition to his/her regular salary or wage.
Example: Steve works for a company that pays him 500 per month and 1% on the first 5,000 sold, 2% on thenext 15,000 sold and 3% on all sales over 20,000. What is his gross pay if he sells 25,000?
What Does Full Time Commission Mean
What does it mean to be paid by commission? A commission is a payment that an employee makes based on a sale. When an employee earns a commission they make a portion of the sale in income. For example if an employee sells a couch for $500 and they get a 10% commission on all sales then they earn $50 on that sale.
Don’t Miss: What Is Ligand In Chemistry
Mathematics For The Liberal Arts Corequisite
- Calculate sales commission given total purchase price and rate
- Calculate rate of commission given purchase price and commission earned
Sales people often receive a commission, or percent of total sales, for their sales. Their income may be just the commission they earn, or it may be their commission added to their hourly wages or salary. The commission they earn is calculated as a certain percent of the price of each item they sell. That percent is called the rate of commission.
Commission / Gross Proceeds And Net Proceeds
Don’t Miss: What Is Imprinting In Biology
More Solved Examples For You
Q1. After allowing a discount of 12% on the marked price of an article, it is sold for Rs 880. Find the market price.
Answer: We have, $$S.P.=Rs880\\ Discount\_ rate=12 \%$$ . Therefore, $$M.P.\quad =\frac \\ M.P.\quad =\frac Rs.\\ M.P.\quad =\frac Rs.\\ M.P.\quad =1000Rs.$$
Q2. A shopkeeper offers his customers 10% discount and still makes a profit of 26%. What is the actual cost to him of an article marked Rs 280.
Answer: Shopkeeper makes proa fit of 26% on selling price item. First, we will determine the selling price of the item.
Calculation of selling price
We know: $$M.P.=Rs280\\ Discount\_ Rate=10%$$ . Therefore, $$S.P.\quad =\quad M.P.\left \\ S.P.\quad =\quad 280\left Rs.\\ S.P.\quad =\quad 280\left Rs.\\ S.P.\quad =\quad 252Rs.$$
Calculation of cost price
Now we that $$S.P.\quad =\quad 252Rs.\\ Gain=26 \%$$ , Therefore, $$C.P.\quad =\quad S.P.\left \\ C.P.\quad =\quad 252\left Rs.\\ C.P.\quad =\quad 252\left Rs.\\ C.P.\quad =\quad 200Rs.$$
Hence, the actual cost of the article is Rs 200
Question. What is the way of calculating a discount?
Answer. In order to calculate a discount, one must multiply the original price by the decimal form of the percentage. In order to calculate the items sale price, subtract the discount from the original price. One can do this by using a calculator or manual estimation.
Question. How can one take 20% off a price?
Question. Explain what is a discount with example?
Question. Explain how one can calculate a 10% discount?
What Is Business Mathematics
Business Math always deals with profit or loss. The cost of a product is fixed by taking into consideration its profit, margin, cash discount, trade discount, etc. Business mathematics is used by commercial companies to record and manage business works. Commercial businesses use maths in departments of accounting, inventory management, marketing, sales forecasting and financial analysis.
Read Also: Algebra Word Problems Worksheets 4th Grade
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
This Module Was Collaboratively Designed Developed And Reviewed By
This learning resource hopes to engage the learners into guided andindependent learning activities at their own pace and time. Furthermore, this alsoaims to help learners acquire the needed 21st century skills while taking intoconsideration their needs and circumstances.
In addition to the material in the main text, you will also see this box in thebody of the module:
As a facilitator you are expected to orient the learners on how to use thismodule. You also need to keep track of the learners’ progress while allowing them tomanage their own learning. Furthermore, you are expected to encourage and assistthe learners as they do the tasks included in the module.
Recommended Reading: What Is Fusion In Chemistry
Presentation On Theme: Business Math 14 Commissions Presentation Transcript:
1 Business Math1.4 Commissions
2 Goals Calculate straight commission earningsCalculate commission earnings based on quotaCalculate graduated commission earningFind the rate of commission
3 Start UpTwo sales jobs are advertised in the newspaper. The first job pays a commission of 3.5% on all sales, and sales usually average $52,000. The second job pays a commission of 4% on sales up to $5,000 and 12% on sales over $5000, and the sales usually average $25,000 a month. Based on the usual monthly sales average, which job pays more?Do Math Builder page 20
4 Straight CommissionCommission may be an amount for each item sold, or a percentage of the dollar value of sales.Straight commission – when the earning for a person come only from the amount they sell.Quantity sold * Rate of commission = commission
5 Commission based on quotaQuota the fixed amount a sales person must sell before they can start earning commission*commission rate = commission
6 Graduated CommissionGraduated Commission the rate of commission increases as sales increase
7 Rate of commission on salesTo find the rate of commission take the amount of commission paid / salesWrap up Page 23In a Group discuss communication page 23
Total Sales Commission Rate Amount Of Commission
B. Solve the following problems and show your solution : 1. A stock broker receives a commission of 11% for selling annuities to her clients. If she sells 60,000in annuities, how much commission will she earn?
2. Patrick works at the Brick, and is paid based on his weekly sales. Last week he sold a couch for 800,and a chair for 560, and two stoves at 2200 each. If Patrick earns 12.6% commission on all items sold, howmuch did he make last week?
3. Barb, the assistant manager of a clothing store, earns a salary or 360 per month. She also receives a5% commission on the first $9000.00 she sells, and 6% on sales over 9,000. If Barb sold 17,800 worth ofclothes last month, what was her total pay?
4. A car salesman earns a 5% commission on sales. If he sells a car for 29,990, how much commissionwill he earn?
Read Also: What Is Conjugation In Biology