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Commissions

This document defines and provides examples of different types of commissions paid to salespeople. It discusses straight commission, which pays a percentage of total sales. Salary plus commission pays a base salary plus a percentage of sales above a threshold. Graduated commission varies the percentage paid based on sales tiers. Examples are provided to illustrate how to calculate earnings under each commission structure.

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Jannette Ramos
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0% found this document useful (0 votes)
143 views13 pages

Commissions

This document defines and provides examples of different types of commissions paid to salespeople. It discusses straight commission, which pays a percentage of total sales. Salary plus commission pays a base salary plus a percentage of sales above a threshold. Graduated commission varies the percentage paid based on sales tiers. Examples are provided to illustrate how to calculate earnings under each commission structure.

Uploaded by

Jannette Ramos
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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COMMISSIONS

COMMISSION
• A commission is a fee that a business pays to a
salesperson (agent) in exchange for his services in
either 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.
Three different types of commission:

• 1. Straight Commission, also called


(revenue commission) –
a commission based on a
percentage of sales only.
Example 1:
• Mike receives 20% commission on
the appliances he sells. If he sell a
TV for PHP7,000, a refrigerator for
PHP12,000, and a heater for PHP
1500, how much does Mike make in
commission?
Solution:
Total sales =
PHP7,000 + PHP12,000 + PHP1,500
= PHP20,500
Commission = PHP20,500  20%
= PHP 20,500  0.2
= PHP4,100

Salary plus Commission
• a commission in which a
salesperson gets his basic salary and
a percentage of whatever sales he
makes.
Example 2:
• Mike decides to work for another
company that will pay him PHP2,000
per week and 10% commission on
sales above PHP20,000 for the week.
If he sold goods worth PHP26,000,
what is his gross pay (salary plus
commission)?
Solution:
Amount of goods sold minus salary of PHP20,000
= PHP26,000 – PHP20,000
= PHP6,000
His commission will be
PHP6,000  10%
= PHP6,000  0.1
= PHP600
Therefore, his gross pay for the week is
PHP2,000 + PHP600 = PHP2,600.
Graduated Commission
a commission, which varies according
to how much sales, is made.
Example 3:
Mike works for a company that pays him
2% on the first PHP 20,000 sold, 3% on
the next PHP 30,000 sold and 5% on all
sales beyond PHP50,000. What is his
gross pay if he sells PHP 60,000?
Solution:

First commission share


= PHP20,000  2%
= PHP20,000  0.02
= PHP400
Second commission
= PHP30,000  3%
= +30,000  0.03
= PHP 900
Third commission
= (PHP60,000 – PHP50,000)  5%
= PHP10,000  0.05
= PHP500
Therefore, his gross pay is
PHP400 + PHP900 + PHP500
= PHP1,800
Thank You

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