2.4 Commission

Match the following

• Payment for a piece of work that is marketed and sold; based on a percentage of sales.

• royalty

• a payment based on a percentage of the worker’s sales

• hourly wage

• a fixed payment for each hour of work

• commission

• a payment based on the number of items created or completed

• salary

• regular fixed payment for work, usually expressed as an amount per year but paid regularly

• piecework

What is commission?

• The total revenue generated by a company

• A fixed salary paid to an employee regardless of sales

• A percentage of a sale given to an employee as a reward

• The act of buying a product from a vendor

In what type of job is commission typically earned?

• Administrative positions

• Sales positions

• Engineering positions

• Teaching positions

Which factor determines the amount of commission earned by a salesperson?

• The distance traveled to work

• The number of hours worked

• The total value of products sold

• The number of years at the company

What is the purpose of a commission-based pay structure?

• To reward employees for their years of service

• To ensure that employees work a fixed number of hours

• To pay all employees the same amount

• To encourage sales people to sell more products

Which of the following is an advantage of a commission-based pay structure?

• Increased financial stability for employees

• A guaranteed minimum wage for all employees

• Greater incentives for employees to sell products

• A simpler calculation of employee compensation

A salesperson earns a 10% commission on their total sales. If they sell $1,500 worth of products, how much commission will they earn?

• $150

• $200

• $1,350

• $1,650

A salesperson receives a base salary of $2,000 per month, plus a 5% commission on their sales. If their total sales for the month amount to $4,000, what is their total income for the month?

• $2,200

• $2,500

• $2,700

• $3,000

A salesperson earns a 7% commission on their sales. If they made $350 in commission this month, how much did they sell in total?

• $2,500

• $5,000

• $7,000

• $25,000

Answer explanation

To solve this problem, we'll represent the total sales amount as "x". The salesperson earns a 7% commission on their sales, so we can set up the following equation:

0.07 * x = $350 (commission earned)

Now, we can solve for "x":

x = $350 / 0.07 x ≈ $5,000

Therefore, the salesperson sold approximately $5,000 worth of products to earn a commission of $350 this month.

A salesperson has a target to earn $3,000 in total income this month. They receive a base salary of $1,500, and a 6% commission on their sales. How much do they need to sell to achieve their target in dollars?

Mathematical Equivalence

ON

Answer explanation

To solve this problem, we first need to determine the amount of commission the salesperson must earn to achieve their target of $3,000 in total income for the month.

Since their base salary is $1,500, we can calculate the required commission as follows:

$3,000 (total income target) - $1,500 (base salary) = $1,500 (required commission)

Now that we know the salesperson needs to earn $1,500 in commission, we can determine the sales amount needed to generate that commission.

Let's represent the sales amount as "x". We know that the salesperson earns a 6% commission on their sales, so we can set up the following equation:

0.06 * x = $1,500 (required commission)

Now, we can solve for "x":

x = $1,500 / 0.06 x ≈ $25,000

Therefore, the salesperson needs to sell approximately $25,000 worth of products to achieve their target of $3,000 in total income for the month.