COMMISSION
Commission or sometimes called brokerage is the money paid for an agent for selling or buying products.
Types of commission:
1. Straight commission.
This is a sole commission or earning of a salesman or an agent who sold the product or item.
2. Salary Plus Commission.
This is a commission for a sales man given to him after selling product or item while he is enjoying his fixed salary.
3. Salary Plus Bonus.
This is if a sales man exceeds his quota. He was given extra bonus.
4. Graduated Commission.
This is when the sales volume increases. The rate of commission also increases.
5. Override Commission.
This is when a commission is earned from the sales of representative. Let say, the supervisor of sales representatives has a commission from his own representatives.
Formula used for commissions:
- commission = rate of commission * sales
- rate of commission = commission / sales
- sales = commission / rate of commission
Illustrative examples:
1. An agent sold a piece of lot for $110,000. His commission from the sales is 7%. How much would he received from his sales?
From the formula given: commission = rate of commission * sales
Given:
sales = $110,000
rate of commission = 7% =0.07
Required: commission
Solution:
From the formula given: commission = rate of commission * sales
commission = 0.07* $110,000 = $7,700
2. John received a commission of $8500 for selling an old car worth $95,000. What is the rate of John's commission?
Given:
sales = $95,000
commission = $8500
Required: rate of commission
Solution:
From the formula given: rate of commission = commission / sales
rate of commission = $8500 / $95,000 = 0.08947 or 8.95%
3. Mario receive $ 10,200 for selling second hand pick-up truck. The amount of money Mario received is 12% of the item price. At what price was pick-up truck sold?
Given:
commission = = $10,200
rate of commission = 12% =0.12
Required: sales
Solution:
From the formula given: sales = commission / rate of commission
sales =$10,200 / 0.12 = $ 285,000
4. Maria,a sales lady in a department store, has a monthly income of $210 a month. In every product she sold she has 2% commission. Last month her total sales reached to $15,000.
How much did she earn for the month?
Given:
sales = $15,000
rate of commission = 2% =0.02
Required: commission
Solution:
From the formula given: commission = rate of commission * sales
commission = 0.02* $15,000 = $300
Total earnings:
Total earnings = Fixed salary + commission
Total earnings = $210 + $300 = $510
So, the total earnings Maria received is $510.
commission = = $10,200
rate of commission = 12% =0.12
Required: sales
Solution:
From the formula given: sales = commission / rate of commission
sales =$10,200 / 0.12 = $ 285,000
4. Maria,a sales lady in a department store, has a monthly income of $210 a month. In every product she sold she has 2% commission. Last month her total sales reached to $15,000.
How much did she earn for the month?
Given:
sales = $15,000
rate of commission = 2% =0.02
Required: commission
Solution:
From the formula given: commission = rate of commission * sales
commission = 0.02* $15,000 = $300
Total earnings:
Total earnings = Fixed salary + commission
Total earnings = $210 + $300 = $510
So, the total earnings Maria received is $510.
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