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Business Mathematics 2nd Quarter 1st Week Lesson Key Concepts of Commissions

This document discusses key concepts of commissions. It defines a commission as a fee paid to a salesperson based on completed sales. There are three types of commissions: straight commission based on a percentage of sales, salary plus commission which provides a base salary and additional percentage of sales, and graduated commission where the percentage increases with higher sales amounts. Examples are provided to illustrate how to calculate earnings under each commission structure.

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717 views11 pages

Business Mathematics 2nd Quarter 1st Week Lesson Key Concepts of Commissions

This document discusses key concepts of commissions. It defines a commission as a fee paid to a salesperson based on completed sales. There are three types of commissions: straight commission based on a percentage of sales, salary plus commission which provides a base salary and additional percentage of sales, and graduated commission where the percentage increases with higher sales amounts. Examples are provided to illustrate how to calculate earnings under each commission structure.

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Dearla Bitoon
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We take content rights seriously. If you suspect this is your content, claim it here.
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LESSON: KEY CONCEPTS OF

COMMISSIONS
BUSINESS MATHEMATICS 2ND QUARTER
1ST WEEK LESSON
KEY CONCEPTS OF COMMISSIONS
• Commission maintains the relationship between the
employer and the employees of the firm. It acts as an
agreement between the salespeople and the firm for
specific targets that need to be reached. It may also
serve as the reward for the services rendered by the
salespeople.
KEY CONCEPTS OF COMMISSIONS
• What is Commission?
A commission is a fee that a business pays to a
salesperson (agent) in exchange for his services in
either facilitating, supervising, or completing a sale. The
commission may be based on a flat arrangement or as a
percentage of the revenue generated by a salesperson.
In other words, commission (remuneration) is a
form of payment to an agent for services rendered.
THREE DIFFERENT TYPES OF COMMISSION:
1. Straight Commission
2. Salary plus Commission
3. Graduated Commission
THREE DIFFERENT TYPES OF COMMISSION:
1. Straight Commission, also
called (revenue commission) –
a commission based on a
percentage of sales only.
(This is very profitable if you are
selling high-ticket items.)
THREE DIFFERENT TYPES OF COMMISSION:
1. Straight Commission, also called (revenue
commission)
Example 1:
Mike receives 20% commission on the appliances he
sells. If he sell a TV for PhP 7,000, a refrigerator for
PhP 12,000, and a heater for PhP 1500, how much
does Mike make in commission?
Solution:
Total Sales = PhP 7,000 + PhP 12,000 + PhP 1,500
= PhP 20,500
Commission = PhP 20,500 x 20% = PhP 20,500 x 0.2
= PhP 4,100
THREE DIFFERENT TYPES OF COMMISSION:
2. Salary plus Commission –
a commission in which a
salesperson gets his basic salary
and a percentage of whatever
sales he makes.
THREE DIFFERENT TYPES OF COMMISSION:
2. Salary plus Commission –
Example 2:
Mike decides to work for another company that will pay him
PhP2,000 per week and 10% commission on sales above
PhP20,000 for the week.
If he sold goods worth PhP26,000, what is his gross pay (salary
plus commission)?
Solution:
Amount of goods sold minus salary of PhP20,000 = PhP26,000 –
PhP20,000 = PhP6,000
His commission will be PhP6,000 x 10% = PhP6,000 x 0.1
= PhP600
Therefore, his gross pay for the week is PhP2,000 + PhP600
= PhP2,600.
THREE DIFFERENT TYPES OF COMMISSION:
3. Graduated Commission –
a commission, which varies
according to how much sales, is
made.
THREE DIFFERENT TYPES OF COMMISSION:
3. Graduated Commission –
Example 3:
Mike works for a company that pays him 2% on the first PhP 20,000
sold, 3% on the next PhP 30,000 sold and 5% on all sales beyond
PhP 50,000. What is his gross pay if he sells PhP 60,000?
Solution:
First commission share = PhP 20,000 x 2% = PhP 20,000 x 0.02
= PhP 400
Second commission = PhP 30,000 x 3% = + 30,000 x 0.03 = PhP 900
Third commission = (PhP 60,000 – PhP 50,000) x 5% = PhP 10,000 x
0.05 = PhP 500
Therefore, his gross pay is PhP 400 + PhP 900 + PhP 500 = PhP 1,800

Note that this type of commission is lucrative for high achievers.


Thank You For
Listening!!!

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