Commission and royalties

 Commission is a percentage of the value of the goods sold and is paid to the salesperson.
 Sometimes a salesman is paid a small wage, called a retainer, plus a percentage of the value of the
goods sold.
 A royalty is a payment made to a person who owns copyright. For example, a musician who writes
a piece of music is paid a royalty on CD and online sales. An author who writes a book is also paid
a royalty based on the number of books sold.
 Royalties, like commission, are calculated as a percentage of sales.
Example1. Jack is a songwriter who is paid a royalty of 12% on all sales. Calculate the royalty that Jack
earns if a song he writes sells CDs to the value of $150 000.
Royalty = 12% of $150 000 = 0.12 × $150 000 = $18 000
Example2. A car salesperson is paid a retainer of $350 per week plus a commission of 8% of the profits
made by the company on cars sold.
a) How much does the salesperson earn in a week when no sales are made? $350
b) How much does the salesperson earn in a week during which a $5000 profit was generated by that
person's sales?
Commission = 8% of $5000 = 0.08 × $5000 = $400
Total earnings = $350 + $400 = $750
Exercise 5
Q1. Danyang is a writer who is paid a royalty of 10% on all sales. Calculate the royalty she earns in a year
if a book she writes sells copies to the value of $30 000.
Q2. A home-improvements company pays commission at the rate of 16% on all sales. What would a
person earn who had sales to the value of:
a)$8000? b) $6972.50?
Q3. Gordon is paid a retainer of $200 per week plus a commission of 6% of the profits made by the
company on the goods that he sells.
a) How much does Gordon earn in a week when no sales are made?
b) How much does Gordon earn in a week during which a $7000 profit was generated by his sales?
Q4. Alfonso earns a retainer of $235 per week plus a commission of 5 % on sales. What are his total
earnings in a week in which his sales are:
a)$1000? b)$4500? c)$7384?
Q5. Veronica earns $400 per week plus 4% on sales, whereas Francis earns 6% commission only.
a) How much does each earn on sales of $8400?
b) What level of sales would yield each the same income?
Q6. Four years ago Inka became an employee of TrakRight Tourism, where her starting annual salary was
$55 600. After her first year she received a 2% pay rise. The next year she received a 3% pay rise. Last
year she received an x% pay rise. If her annual salary is now $61 042, determine the value of x, correct to 1
decimal place.
Q7. Fiona sells cleaning equipment. She earns a commission of 17.5% of all weekly sales in excess of
$10000. How much commission does she earn on weekly sales of:
a) $8000? b) $12 000? c) $24 000?
Q8. Zane has a job selling advertising. He is paid the following commission on his weekly sales:
• 1% for the first $50 000 worth of sales
• 2% of the next $30 000 worth of sales
• 6% of the value of any remaining sales
How much would Zane earn in a week in which his sales were:
a)$46 000? b)$50 000? c)$65 000? d)$80 000? e)$92000?
Q9. Marie is a real-estate agent. She charges the following commission for selling home units:
• 3% for the first $300 000 of the selling price of the unit
• 2% for the next $100 000
• 1.5% for the remainder of the selling price
Calculate how much Marie would earn for selling a unit for:
a) $290 000 b) $350 000 c) $380 000 d) $455 000 e) $550 000
Answers
Q.1. $3000 Q.2 a) $1280 b) $1115.60 Q.3. a) $200 b)$620
Q.4. a) $285 b) $460 c) $604.20 Q.5. a) Veronica earns $736; Francis earns $504 b) $20 000
Q.6. 4.5% Q.7. a) $0 b) $350 c) $2450 Q.8.a) $460 b) 500 c) 800 d) $1100 e) $1820
Q.9. a) $8700 b) $10 000 c) $ 10 600 d) $11 825 e) $13 250