SELF-LEARNING MODULE

BUSINESS MATHEMATICS
Quarter 2 / Module 10

Name:_______________________________Grade/Strand/Section:________________________
School:______________________________LRN:______________________ Control No.:_____

I. Objectives:
• 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.

II. Subject Matter: Basic Concepts of Commissions

III. Learning Resources:

Curriculum Guide/Learning Materials
Most Essential Learning Competencies (MELCs Guide)
Media and Internet Sources

IV. Procedures and Learning Activities:

Review: 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.

Discussion: 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.

ACTIVITY: 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

ANALYSIS:
1. What option would he probably choose? How and Why?

ABSTRACTION:
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?
Solution: ₱5,000 – ₱3,000 = ₱2,000
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

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 COMMISSION

₱100,000 0.025 2,500
₱50,000 0.035 1,750
TOTAL COMMISSION ₱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

Activity 1.1
Solve the following problems. Write your answers on your notebook. Don’t forget to
show your complete solution.
1. Sonny works as a furniture salesman and earns a base salary of ₱1,550 per week plus
6% commission on sales. What was Sonny’s weekly gross salary if his total sales were
₱57,000?

2. Veronika works at Future Shop and earns ₱350 per hour plus 6% commission on
sales. Last week Veronika worked 40 hours. What was Veronika’s weekly gross salary
if her total sales were ₱25,000?
3. William earns straight commission as a real-estate agent. Last month his total sales
were ₱971,168.00. If William earns a 3% rate of commission, what was his gross income
last month?

4. Sophia earns straight commission selling cell phone contracts. Last month she sold
341 cell phone contracts worth a total of ₱238,192.00. If Sophia earns a 5% rate of
commission, what was her gross income last month?

5. Brian is a salesman for a wholesale computer parts company. He earns straight

commission at a rate of 4%. Last month his total sales were ₱382,968.00. What was his
gross monthly income last month?

Activity 1.2
Solve for the amount of commission. Don’t forget to show your complete solution.
Write your answers on your notebook.
Complete the table:

Amount of Sales Rate of Commission Amount of Commission

3 400 2% (1)
5 000 4% (2)
10 000 5.5% (3)
50 000 10% (4)
110 000 11% (5)

ASSESSMENT
Direction: Choose the letter of the best answer. Write the chosen letter on your
notebook.
1. What do y o u 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
2. What do y o u 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
3. 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
4. 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
5. 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. ₱12,000 c. ₱15,600
b. ₱3,600 d. ₱16,500
6. 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
 For numbers 7 – 15, compute for the amount of commission

Amount of Sales Rate of Commission Amount of Commission

1 500 1.3% (7)
2 200 2% (8)
4 500 2.2% (9)
5 000 3% (10)
11 500 3.6% (11)
15 000 6% (12)
25 000 11% (13)
50 000 15% (14)
56 000 20% (15)

ENRICHMENT

ANSWER KEY:

REVIEW: ASSESSMENT

ACTIVITY 1.1

ACTIVITY 1.2