Business Mathematics Module 10 Commissions PDF

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Senior High School

Business Mathematics Quarter 2 – Module 10:

Commissions

Writer:

IRISHGEL M. CABASISI Teacher II – Caduang Tete National High School (Macabebe) Editors: JANE P. VALENCIA, Ed.D. – EPS – Mathematics (CHAIRMAN)

CHARIZEL T. ARCILLA SPST I Malino National High School JHOANNA S. MANALOTO – T-II San Juan High School (Mexico)

What I Need to Know This will give you an idea of the skills or competencies you are expected to learn in the module. After going through this module, you are expected to: • • • •

illustrate the different types of commissions; compute commissions on cash basis and commission on installment basis; illustrate how to obtain down payment, gross balance, and current increased balance; and solve problems involving interest and commission.

What I Know This part includes an activity that aims to check what you already know about the lesson to take. If you get all the answers correct (100%), you may decide to skip this module. Direction: Choose the letter of the correct answer. Write the letter of your answer on a separate sheet of paper. Show your solution. 1. What do you call a type of commission where a person is paid a percentage of his/her sales only? a. Straight commission c. Commission b. Commission rate d. Salary Plus Commission 2. What do you call a fee paid to person who makes a sale? a. Straight commission c. Commission b. Commission rate d. Salary Plus Commission 3. What do call a type of commission where a person gets paid a salary and a percentage of his/her sales? a. Straight commission c. Salary Plus Commission b. Commission rate d. Graduated Commission 4. What do call a type of commission where the percentage changes based on how much someone sells? a. Straight commission c. Salary Plus Commission b. Commission rate d. Graduated Commission

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5. John is earning a commission of 3% on all his sales other than his basic salary of ₱10,000. How much is his take home pay in a month where his sales amount to ₱75,000? a. ₱10,000.00 c. ₱75,000.00 b. ₱25,1200.00 d. ₱12,250.00 6. A salesman agreed to have a monthly basic pay of ₱12,000 plus a commission of 8% on all sales above ₱75,000. How much is his take home pay in a month where his total sales amounted to ₱120,000? a. ₱15,600 c. ₱12,000 b. ₱3,600 d. ₱16,500 For numbers 7 – 15, compute for the amount of commission Amount of Sales 1 200 3 800 5 260 8 680 12 500 100 000 174 500 200 500 1 000 000

Rate of Commission 4.5% 8% 6% 8.5% 12% 11% 10% 3.5% 2%

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Amount of Commission (7) (8) (9) (10) (11) (12) (13) (14) (15)

Lesson

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Basic Concepts of Commissions

When a business sells a product, it needs to know if it is making money, and employees need to know how their pay is calculated. In this lesson, you will learn about calculating commission.

What’s In As a recall of our previous lesson about Interest, read and analyze the given problem and then solve. Don’t forget to show your complete solution. Write your answers on your notebook. 1. Jodi owes ₱58,000 loan for ABZ bank. The interest rate is 3.25% and the loan will be paid off over 3 years. How much will Jodi pay altogether?

2. Iwa puts ₱10,000 into a savings account that earns 4% in interest. How much will she have after 3 months?

What’s New

Erick resigned from his job out of boredom and took a new job as a sales representative. Believing that he will enjoy more in this new job, he didn’t really mind what he will get. The following are the options he was offered: 1.His pay would be through straight commission basis. 2.He gets a fixed base salary plus a commission. 3.He gets paid through graduated commission What option would he probably choose? Read analyze this module for you to be able to help Eric to decide which option he should take.

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What is It

Commission is a fee paid to person who makes a sale. The commission is usually a percent of the selling price. The percent is called the Commission Rate

There are 3 different types of commission. These are: 1. Straight Commission 2. Salary Plus Commission 3. Graduated Commission

Straight Commission It is a type of commission where a person is paid a percentage of his/her sales only. Let us take a look at this example: Example: Karyl works on a “commission only” basis and receives 3% on her monthly sales without a base salary. What is her commission and total pay during a month when she sells ₱108,000 worth of appliance, compute for the commission. Solution: The commission will be 3% of ₱108,000. And that is, ₱108,000(0.03) = ₱3,240 Salary plus Commission It is a type of commission where a person gets paid a salary and a percentage of his/her sales. Let us take a look at this example: Example: Mr. Cueva decides to work for ABX Company that will pay him ₱3,500 per week and 6% of any sales above ₱3,000. If he sold goods worth ₱5,000, what is his gross pay? ₱5,000 – ₱3,000 = ₱2,000 Solution: His commission will be 6% of ₱2,000 and that is: (₱2,000)(0.06) Commission = ₱120 His gross pay is computed as ₱3,500 + ₱120 = ₱3,620

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Graduated Commission It is a type of commission where the percentage changes based on how much someone sells. Most of the companies encourage their agents to sell more goods. Let us take a look at this example: Example: Mary has a monthly commission plan where she receives 2.5% on the first ₱100,000 of sales during the month and 3.5% on the sales above ₱100,000. If her total sales during the month is ₱150,000, compute her commission. Solution: 150,000 – 100,000 = ₱50,000

SALES AMOUNT COMMISSION RATE ₱100,000 0.025 ₱50,000 0.035 TOTAL COMMISSION

COMMISSION 2,500 1,750 ₱4,250

Commission on Installment Basis All computations of commission above are on cash sales. If the sales are on installment basis, they are giving commissions based on the payment made by the buyers. Let’s take a look at this example: Example: A salesman, earning 4% commission made a sale of ₱100,000 to be paid in 5 equal monthly installments. How much will be his monthly commission? Solution: ₱100,000 ÷ 5 = ₱20,000 4% of 20, 000 is ₱800.00 Therefore the salesman’s monthly commission is ₱800.00 Down payment, Gross Balance and Current Increased Balance What is down payment? A down payment is a type of payment made in cash during the onset of the purchase of an expensive good or service. The payment represents a percentage of the full purchase price. What is gross balance? A down payment is a type of payment made in cash during the onset of the purchase of an expensive good or service. The payment represents a percentage of the full purchase price. What is Current Increased Balance? A down payment is a type of payment made in cash during the onset of the purchase of an expensive good or service. The payment represents a percentage of the full purchase price.

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