SOLVING PROBLEMS

INVOLVING
COMMISSIONS
Objectives
At the end of this lesson, you should be able to:
1. Determine the appropriate formula to be
use in solving problems about commission;
2. Solve problems involving commission;
3. Explains the advantages and disadvantages of
working on commission; and
4. Value the skills of selling.
 Review/Drill:
Direction:Identify what is asked. Choose your answer inside the
box below. Write your answers on your activity notebook.
1. It is the type of commission similar in computing straight
commission.___
2. Type of commission lucrative for high achievers. __________
3. A commission in which a salesperson gets his basic salary and
a percentage of whatever sales he makes. _________
4. A commission, which varies according to how much sales, is
made. ______
5. Is a fee that a business pays to a salesperson (agent) in
exchange for his services in either facilitating, supervising, or
completing a sale _________
6. Also called (revenue commission) is a commission based on a
percentage of sales only. _________________
Discussion of the Activity
If you accepted a job based on
commission, you must understand the
process on how to calculate the amount of
your earning. Bear in mind that your
income may be affected by several factors,
to avoid conflict you have to take time to
fully understand your employment contract.
Discussion of the Activity
“When your profession becomes your
mission, your life will be filled
with compassion. You will start to sell for
others. Selling will no longer be
about. It will now be about your buyers”. -
Lloyd Luna
Discussion of the Activity
As they say, selling is a skill. Most of
today’s millionaires held a sales job during
their younger age. Plenty of wealthy
celebrities admitted they did sales work
before becoming rich, too.
Discussion of the Activity
Some research shows that most of the
successful people possessed strong sales
skills. “Sales skills are very valuable,” says
Cheryl Palmer, founder of career coaching
firm Call to Career. “Every company runs on
sales.”
.
Lesson Proper
Computation of commission makes use of the
basic formula we have learned.
P = B x R which refers to
Percentage = Base x Rate
In using this formula in computing for the
commission, we will use;
Percentage ( P ) = Commission
Base ( B ) = Amount of Sales
Rate ( R ) = Commission rate
Thus, the basic formula in computing the
commission would be
 Formulas:
Commission = Amount of Sales x Commission Rate
Amount of Sales =

Commission Rate =
 Example 1. Alma Del Moon is a real estate
agent of HIH Realty. She is paid based on
commission only. She is given 3.5% commission
on her sales. For the month of May, she was able
to sell a condo unit worth ₱ 1, 850,000. Her
commission ( which is also her gross earning )
would be
Given:
Commission rate = 3.5%= 0.035
Amount of sales = ₱ 1, 850,000
Commission = ?
Solution:
Commission = Amount of Sales x Commission Rate
= ₱ 1, 850,000 x 0.035
Commission = ₱ 64, 750
Straight Commission
Example 2. Patricia, a HIH agent sold a piece
of property worth ₱ 890, 000. She was given
a 5.75% commission of her sales. How much
is her commission?
Given: Commission Rate = 5.75%=0.0575
Amount of sales = ₱ 890,000
Solution:
Commission = Amount of Sales x Commission Rate
= commission rate x amount of sales
= (0.0575) ( 890,000)
= 51, 175
Thus, the commission is ₱ 51, 175.
Solution:
Commission = Amount of Sales x Commission Rate
= commission rate x amount of sales
= (0.0575) ( 890,000)
= 51, 175
Thus, the commission is ₱ 51, 175.
Incremental Commission or Graduated Commission
Example 3. To works for a company that pays him
2.8% on the first ₱30.000 sold, 3.4% on the next
₱20, 000 sold and 4.8% on all sales over ₱50, 000.
What is his gross pay if he sells ₱ 75, 000.
Solution:
Given: Commission rate ( Level 1 ) = 2.8% = 0.028
Commission Rate (Level 2 ) = 3.4% = 0.034
Commission Rate(Level 3) = 4.8% = 0.048
Using an incremental commission schedule, we
determine the pay for
each level and then get the sum of all the levels.
Level pay = Sales per Level x Commission Rate
Level 1 pay = 20,000 x 0.028 = 560
Level 2 pay = 30,000 x 0.034 = 1, 020
Level 3 pay = 25,000 x 0.048 = 1, 200
Total gross pay = Level 1 + Level 2 + Level 3
= 560 + 1, 020 + 1,200
= 2, 780
Thus, the total gross pay is ₱ 2,780.
Using an incremental commission schedule, we
determine the pay for each level and then get the
sum of all the levels.
Level pay = Sales per Level x Commission Rate
Level 1 pay = 20,000 x 0.028 = 560
Level 2 pay = 30,000 x 0.034 = 1, 020
Level 3 pay = 25,000 x 0.048 = 1, 200
Total gross pay = Level 1 + Level 2 + Level 3
= 560 + 1, 020 + 1,200
= 2, 780
Thus, the total gross pay is ₱ 2,780.
Solution :
Gross Pay = Salary + Commission
= Salary + ( Amount of sales x Commission rate )
= ₱ 3, 780 + ( ₱ 123, 000 x 0.068 )
= ₱ 3, 780 + ₱ 8, 364
Gross Pay = ₱ 12, 144
Commission with Override
Example 5. Dayzelle receives a 5.7% commission on her
sales. She supervise 16 sales representatives and receives
a 1.95% override on all their sales. The 4 of her
representatives made sales of ₱27,500 each, 5 were made
sales of ₱ 32, 800 each, while the rest of her
representatives made sales of ₱41,450 each, and
she made sales of ₱ ₱21,300. What were her
earnings?
Solution:
Compensation of Dayzelle’s commission based on
her own sales:
Commission 1 = Commission Rate x Amount of Sales
= (0.057) (21, 300)
Commission 1 = ₱1, 214.10
Compensation of Dayzelle’s commission based on
her representatives sales:
Commission 2 = Commission Rate x Total Amount of Sales
= (0.0195) (564, 150)
Commission 2 = ₱11, 000. 93
Solution:
Total Commission = Commission 1 + Commission 2
= ₱1, 214.10 + ₱11, 000.93
= ₱12, 215.03
Thus, Dayzelle’s total commission is ₱ 12, 215.03
It’s your turn…
Direction: Compute for the following commissions. Write your
answers on a separate sheet.
1.Jayney dela Fuente works on a pay schedule of ₱21, 300 per
month plus a 3% commission on all sales made. If she sold ₱104,
900 last month, what is Jayney’stotal gross pay?
2. Jonax Enrile sells HIH projectors for WTT Products. She
receives commission schedule of 2.9% of sales up to ₱150,000,
3.5% for the next ₱200, 000, and 4.5%
on the sales greater than ₱350,000. What is Jonax’s total gross
pay for last month if her sales volume is ₱460,000?
3. If the commission on the sale ₱24, 375 worth of appliances is
₱1,979.25. What is the commission rate?
4. Migz, a Realty Estate agent earns a commission of
8.5% on his sales. Lasweek he had sales of ₱897, 000, ₱1,
200,000, and ₱1, 450,000. Find the total commission he
earned for a week.
5. Maxwell Del Moon is paid a commission of 6% on the
first ₱ 120, 000 of monthly sales and 7.5% of above that
amount. If he made sales of ₱ 127, 000 for the month,
how much would he received?