BUSINESS MATH GRADE 12
In the
WEEK 1: Commission and Interest
Commission – a fee that a business pays to a
salesperson or agent. In exchange for his services in
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.
Types of Commission:
1. Straight Commission – a commission based on a
percentage of sales only. This is also called revenue
commission
Example 1: Ethan receives a 20% commission on the
appliances he sells. How much does Ethan make in
commission if he sells a TV for ₱7,000, a refrigerator for
₱12,000, and a flat iron for ₱1,500?
Example 2: A car salesman earns a 3% commission
on sales. If he sells a car for ₱902,000, how much
commission will he earn?
2. Salary plus Commission – commission in which a
salesperson gets his basic salary and a percentage of
whatever sales he makes.
Formula: Salary + Commission (based on condition)
Example 3: Ethan decides to work for another company
that will pay him ₱2,000 per week and 10% commission
on sales above ₱20,000 for the week. If he sold goods
worth ₱26,000, what is his gross pay (salary plus
commission)?
Example 4: Jose works as a sales agent for ABC’s
Trading and earns a basic monthly salary of P9,500 plus
5% commission on all his sales. If he made total sales of
P60,000 for the month, find his:
a. Commission b. Gross Pay
3. Graduated Commission – a commission that varies
according to how much sales are made. The higher the
sales, the higher the commission rate
Example 5: Ethan works for a company that pays him
2% on the first ₱20,000 sold, 3% on the next ₱30,000
sold, and 5% on all sales beyond ₱50,000. What is his
gross pay if he sells ₱60,000?
Kinds of Commission based on Mode of Payment:
1. Cash basis
Example 6: Ethan works at ABC Gadget Store. For every
cash purchase of a cell phone, he gets a 6.1%
commission. In a particular month, he was able to sell
ten cellphones costing ₱18,000 each. How much was his
total commission for such cash sales?
2. Installment basis
Example 7: At ABC Gadget Store, some items are paid
on an installment through credit cards. Ethan was able
to sell ten cellphones costing PhP18,000 each. Each
transaction is payable in 6 months, equally divided into
six equal installments without interest. Ethan gets a 2%
commission on the first month for each of the ten cell
phones. Commission decreases by 0.30% every month
after that and is computed on the outstanding balance
for the month. How much commission does Ethan
receive in the first month? In the second month?
third month? On the fourth month? On the fifth month?
On the sixth month? How much will his total
commission be at the end of the installment period?
Activity 1.1:
1. Alvin receives a monthly salary of ₱6,700 and some
additional money from 5% commission rate whenever
he sells an item. If he sold ₱15,000 worth of items this
month, how much gross pay would he get?
2. Jill asked for an advance of ₱7,500 from her
commission. At the end of the month, she was able to
sell a total amount of ₱480,000. If she is paid with a 5%
commission, how much is her gross pay at the end of
the month? Clue: Gross Pay = Commission – Advance
Interest can be distributed equally into the number of
payments in installment purchases or sales. This means
that the total interest is simply principal multiplied by
the interest rate and time (I=Prt). However, there are
cases when the interest varies because the interest is
based on the unpaid or outstanding balance. Look at
the examples below:
EQUAL MONTHLY INTEREST
Example 8: Anica bought perfume using a credit card
for ₱2,400, payable at 15% interest in four months. The
principal is also repaid each month equally with four
payments of ₱600 each. Compute for the total interest
when it is paid equally over four months.
MONTH UB I PP TP NB
Example 9: Suppose that the interest is computed on
the unpaid balance each month, calculate the total
interest on Anica’s purchases. Assume that the principal
is still repaid ₱600 per month for four months
MONTH UB I PP TP NB
We can combine computing for commission and
interest based on installment purchases into one table.
See the example below.
If Kayla purchased a computer worth ₱30,000 and was
paid in 6 equal monthly installments with an annual
interest of 15% and similar interest per month, how
much would she have to pay overall? If the sales agent
Robert will get commission on Kayla’s purchase based
on the unpaid balance, with him getting 2% on the 1st
month and .3% to be deducted every month, how much
will he get as commission overall? How much
percentage of the interest will be used to pay Robert his
commission?