Business
Mathematics
Quarter 2
Commission with overrides
Formula:
Commission
= Commission rate x Amount of Sales
𝐴𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑆𝑎𝑙𝑒𝑠 =
𝐶𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛
𝐶𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛 𝑅𝑎𝑡𝑒
𝐶𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛 𝑅𝑎𝑡𝑒 =
𝐶𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛
𝐴𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑆𝑎𝑙𝑒𝑠
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
Example:
Jayney dela Fuente works on a pay schedule of
P21, 300 per month plus a 3% commission on
all sales. If he sold P104,900, what is Jayney’s
total gross pay?
Solution:
Commission = Commission rate x Amount of Sales
= (0.03) (104,900) = 3,147
Total Compensation = Salary + Commission
Total Compensation = 21, 300 + 3, 147 = P24, 447
Leonora Bautista receives a basic salary of P13,750 a month.
She also receives a bonus of 5% of the amount of sales she
made exceeding her quota of P75,000. For the month of
December, the total amount of sales she was able to make is
P128,000. What is her total earnings for the month?
Solution:
Commission = (Amount of Sales - Quota) x commision rate
= (128,000 - 53,000) (0.05) = 2, 650
Total Compensation = Salary + Commision
= 13, 750 + 2, 650
= P16,400
Evelyn de Guzman sells OHP projectors for WSS Tech
Products. She is on incremental commission schedule of
2.5% of sales up to P100, 000, 3% for the next P150,000
and 4% on sales greater than P250,000. What is Evelyn’s
total gross pay for last month if her sales volume was
P300,000?
Solution:
Commission rate (level1) = 0.025
Commission rate (level2) = 0.03
Commission rate (level3) = 0.04
Level pay 1 = 100,000 x 0.025 = 2, 500
Level pay 2 = 150, 000 x 0.03 = 4, 500
Level pay 3 = 50, 000 x 0.04 = 2, 000
Total gross pay = 2, 500 + 4, 500 + 2, 000
= P9,000
Commission with overrides
when a salesperson earns commission on
his/her own sales and also earns
commission from the sales of his/her
representatives.
Example:
Teresita Cadauan receives a 6%
commission on her sales. She supervises
12 sales representatives and receives a
2.5% override on all their sales. The
representatives made sales of P48, 300
and she made sales of P9,400. What were
her earnings?
Solution:
Commission 1 = Commission Rate x Amount of Sales
= (0.06)(9, 400)
= P564
Commission 2 = Commission Rate x Amount of Sales
= (0.025)(48, 300)
= P1, 207.50
Total Commission = 564 + 1, 207.50
= P1, 771.50
Commission on cash basis–
this is similar to computing
straight commission which
is computed by directly
multiplying the commission
rate to the total amount of
sales.
Commission on
instalment basis – the
commission is
computed based on the
instalment periods.
At ABC Gadget store, some items are paid on instalment basis
through credit cards. Mike was able to sell 10 cell phones
costing P18,000 each. Each transaction is payable in 6 months
equally divided into 6 equal instalments without interest. Mike
gets 2% commission on the first month, for each of the 10 cell
phones. Commission decreases 0.30% every month thereafter
and computed on the outstanding balance for the month. How
much commission does Mike receive on the first
month?2nd,3rd,4th,5th, and 6th month? At the end of instalment
period, how much is his total commission?
Solution:
First month commission:
= P18,000 x 10 cell phones x 0.02 = P3, 600
2nd month = P15, 000 x 10 cell phones x (0.02-0.003) = P2,550
3rd month = P12, 000 x 10 cell phones x (0.017-0.003) = P1,680
4th month = P9, 000 x 10 cell phones x (0.014-0.003) = P990
5th month = P6, 000 x 10 cell phones x (0.011-0.003) = P480
6th month = P15, 000 x 10 cell phones x (0.008-0.003) = P150
Total commission = P9,450