COMMISSION

APRIL 25-29, 2022

Objectives

 Illustrate
the different types of
commissions (AMB_BM11BS-lla-11)
 Compute commissions on cash basis and
commission on installment basis
(ABM_BM11BS-lla-12)
 Compute down payment, gross balance
and current increased balance
Definition of terms

 Commission- is a fee that a business pays

to a salesperson (agent) in exchange for
his service in either facilitating, supervising,
or completing a sale.
 Total sales- is the amount of sales made
by the salesperson.
 Commission rate- is the percent taken off
from the selling price.
 In
sales, the amount of money received by
an employee or agent for performing a
business transaction or service is called
commission.

 Three types of commission

 1. Straight Commission
 2. Graduated Commission
 3.Salary plus Commission
Formulas

 Commission = Total Sales x

Commission rate
 Total Sales = Commission ÷
Commission rate
 Commission rate = Commission ÷
Total Sales x 100
Straight
Commission- is
when a sales is paid a
percentage on sales
only.
Example 1

 Arman is a car sales agent paid

based on commission only. He
receives 1.75% of his monthly sales.
For the current month, his sales is Php
2,125, 000. How much is his total
commission?
 Commission= sales amount x commission rate
Solution:
Commission= Php 2, 125, 000 x 1.75%
= 2,125, 000 x 0.0175
= Php 37, 187. 50
 His total commission or earnings for
the month is Php 37, 187.50
Graduated commission is a
commission that varies
according to how much
sales are made.
Example 2

Mary has a monthly commission

plan where she receives 2.5% on
the first P100,000 of sales during
the month and 3.5% on sales
above P100,000. If her total sales
during the month is P150,000,
compute her commission.
Mary has a monthly commission plan where she receives 2.5% on
the first P100,000 of sales during the month and 3.5% on sales above
P100,000. If her total sales during the month is P150,000, compute
her commission.

 Solution:
 Commission (1st) = P100, 000 x 0.025 = P2, 500
(2nd) = 150, 000 – 100, 000 = P50, 000
= 50, 000 x 0.035 = P1, 750
= 2,500 + 1750
= P4,250
Salary Plus Commission- is
when a person gets paid a
salary and a percentage of
his/her sales.
Example 3

Arman has a monthly basic salary of P15,000

aside from 1.75% from his monthly sales. For the
current month his sales is P2, 125, 000, how much is
his total earnings for the month?
 Solution:
 Total Earnings= Salary + Commission
= 15, 000 + (2, 125, 000 x 0.0175)
= 15, 000 + 37, 187. 50
= P 52, 187.50
 Computing commission on cash
basis
Example:
Sam works at ABC Gadget Store. For every
cash purchase of a cellphone, he gets 6.1%
commission. Last April, he was able to sell 10
cellphones costing P18,000 each. How much
is his total commission for such cash sales?
Sam works at ABC Gadget Store. For every cash purchase of a cellphone, he gets
6.1% commission. Last April, he was able to sell 10 cellphones costing P18,000 each.
How much is his total commission for such cash sales?

 Solution:
 Total Sales = P18,000 / cellphones x 10
cellphones = P180, 000
 Cash commission = P180, 000 x 6.1%
= P180,000 x 0.061
= P 10, 980
 Computing
commission on
installment basis
 Example 4
Sandy is a sales agent of a
computer store. She sold 8
laptops worth P24, 000 each last
month. Each transaction is
payable for 12 months for
P2,000 monthly equal payment.
How much commission will she
receive monthly if she is paid to
Sandy is a sales agent of a computer store. She sold 8 laptops worth P24, 000 each last month. Each
transaction is payable for 12 months for P2,000 monthly equal payment. How much commission will
she receive monthly if she is paid to 5% commission on her sales?

 Solution:
 Monthly commission= 8 laptops x P2,000 monthly
payment x 5%
= P16, 000 x 0.05
= P 800
 Total commission = P 800 x 12 months
= P9, 600
 Sandy’s monthly commission for 8 laptops she sold or a
total of P9, 600 for one year
 Down payment,
gross balance and
current increased
balanced
Downpayment is the first
payment that one makes when
one buys something with an
agreement to pay the rest later.
Example

 Car dealer normally require a certain percent

as a down payment. If a car cost P850,000 and
a 20% down payment is required, how much
would be the down payment?

Solution:
Down payment = P850, 000 x 20%
= P170, 000
Book balance or Gross balance is the
total amount of money a bank has on
deposit before adjusting for uncleared
checks or deposits, as well as reserve
requirements.
 For example
 A check amounting to P8,000 that has
been deposited today may not be
withdrawn the next day because it has not
been cleared yet. If your bank passbook
currently contains P40,000. You may not
be able to withdraw the whole amount
yet because your gross balance is only
P32, 000 since your check has not been
cleared yet.
Current increased balance is the
total amount you have to pay that
includes penalties of interest
incurred by unpaid balance from
loan or payment you are
supposed to have made but were
not able to do so on time.
Example

 Your credit card’s current statement of account has

a total amount due of Php 9,386.25 with a minimum
amount due at 500 or 3% whichever is higher. If you
pay only the minimum amount due, a financing
charge of 3.75% of a remaining balance will be
charge to the next bill. Assuming you refrain from
using your credit card for the next 2 months and the
financing charge of 3.75% is charged every billing
period, below is your expected monthly bill for the
next tow months.
 Total amount due for the month
Time (t) (Outstanding balance + Finance Minimum amount
charge) due
0 Php 9, 386.25 500
Php 9, 386.25 –Php 500= Php
8,886.25
Php 8,886.25 * 0.0375= Php 333.25
1 Php 8,886.25+ 333.23 = Php 9,219.48 500
Php 9,129.48-Php500= Php 8,719.48
Php 8,719.48*0.0375=Php 326.98
Php 8,71948 + Php 326.98 =
2 Php9,046.46 500
For the next two months, payment of P1,000 has already been made for the
credit card bills. However only P339.79 (9,386.25- P9, 046.46) has been deducted
from the original debt.
Example

 As of this month’s cut-off date, the current total

amount due from your purchases using your credit
card is P99, 386.59. The minimum required payment
is 5% of the total amount due. If you pay only the
minimum required payment, a financing charge of
3.4% of the remaining balance will be charge to the
next bill. Assuming you refrain from using your credit
card on any of your purchases for the next 3 months
and the financing charge of 3.4% is charge every
billing period, show your expected bill for the next 3
months.
 Total amount due for the month Minimum required
Time t
(Outstanding Balance + Finance payment for the
(month)
Charge) month
0.05(99,386.59)
0 P 99, 386.59 =4, 969.33
(99, 386.59 - 4,969.33) = 94,417.26
0. 034(94, 417.26 ) = 3,210.87 0.05(97,627.45)
1 94,417.26 + 3,210.19 =97, 627.45627.45 = 4,881.37
97,627.45- 4,881.37= 92,746.08
= 034(92,746.08) = 3,153.37 0.05( 95,899.45)
2 92,746.08 + 3,153.37= 95,899.45 = 4,794.97
95,899.45 - 4,794.97=91,104.55
0.05(94,202.03)
3 0.034(91,104.48)=3,097.55
= 4,710.10
91,104.48 + 3,097.48 =94,202.03
 Observe that for the next three months, a total
of P14,645.67 has already been paid for the
credit card bills. However, only P5,184.56
(99,386.59 – 94,202.03) has been deducted so
far from the original debt of P99,386.59. Hence,
every time we keep paying only the required
minimum payment, more money goes to
interest payments rather than payment of the
actual debt.
References

 Lopez, Brian Ray C., Martin-Lundag, Leach C., Dagal, Keneth

Adrian P., and Garces, Ian June L. 2016. Business Math, Quezon
City, Vibal Group, Inc.
 Paredes, Lorna I., Walo, Ma. Lailani B., Ramos Jr., Aurelio P., Asinas,
Mark Adrian S. and Cando-Asuncion, Joy. 2016. Teaching Guide for
Senior High School Business Mathematics. Quezon City:
Commission on Higher Education.