Professional Documents
Culture Documents
Costs and Profit
Costs and Profit
Costs and Profit
Commission
Many of our salespeople ask about commission. Although you will be selling expensive items, you
may not make a large commission. It is important to remember how profit works. There are many
costs associated with production some are variable costs, others are fixed costs. Direct materials,
for example, are variable costs. Next, the company also has to pay for labor and overhead. All of
these expenses are factored into the price of the item. Finally, the company marks up the item in
order to cover costs. Once it recoups the costs of production, it makes a profit. Your commission is
based on that profit margin.
Reading 2
Read the employee handbook. Then, mark the following statements as true (T) or false (F).
1 (F) According to the handbook, expensive items indicate large profit margins.
Vocabulary
1 G recoup
2 E expense
3 C direct materials
4 D variable costs
5 F mark up
6 A cover
7 B labor
B to regain
Word BANK
2 The company made a large profit on the product because the costs were so low.
5-Listen and read the employee handbook again. Why does a company mark up items?
The company brands the item to cover costs. Once you recoup your production costs, you
make a profit.
Listening
6 Listen to a conversation between a salesperson and a manager. Choose the correct answers.
2 What example does the man give of a cost associated with production?
B overhead D profit
commission
Based on
traffic
total price
costs
overhead
most products