Business Mathematics

Name: ________________________________________ Grade Level: __________ Section: _____________

Learning Activity Sheets

Commissions and Overrides
Background Information for the Learners
1. Sales agents and brokers are generally paid commissions as incentives for increasing a firm’s sales.
Some of these sales agents or brokers are paid solely through commission or what is termed as plain
commission. Their gross earnings would be their total commission.
2. Other sales agents and brokers are paid basic pay plus commission. Their gross earnings would be
their basic pay plus their commission.
3. Marketing and/or product managers are generally paid overrides on the sales of people under them.
For these people, gross earnings will be their basic pay plus commission plus override.
4. If the sales are on an installment basis, companies do not give commission based on sales. Rather,
they are given commission based on the collection, that is, payment made by buyers.

Plain Commission
Computation of the commission makes use of the basic formula we learned, P = BR. The commission
is the percentage (P), the sales are the base (B), and the commission rate is the rate (R).
Examples:
1. Asta is a sales agent for the Black Bulls Realty. She is paid based on commission only. She is given
a 2% commission on her sales. For the current month, her sales were 1,035,000Php. Her
commission (which is also her gross earnings) would be:
Commission = 1,035,000 x 2%
= 20,700
2. Yuno is a car sales agent. He is paid commission only at the rate of 2.5%. For the month, he sold
two cars totaling 1,875,000Php. His commission (gross earnings) would be:
Commission = 1,875,000 x 2.5%
= 46,875
Commission and Salary
Generally, if a person is employed by a firm as a salesman, he or she is given a basic salary in addition
to the commission he or she is given on his or her sales. His or her gross earnings, therefore, are equal to:
Gross Earnings = Basic Salary + Commission
Examples:
1. Asta’s gross earnings assuming a basic salary of 10,000Php per month:
Gross Earnings = Basic Salary + Commission
= 10,000 + 1,035,000 x 2%
= 10,000 + 20,700
= 30,700
Overrides
Yami is a product manager with five sales representatives under him. The company gives him an
annual salary of 126,000Php; commission of 5% on his own sales; and an override of ½% on his men’s sales.
Find his gross earnings for the month if his total sales is 365,00Php with his men able to sell a total of
1,548,263Php for the month.
Given: Annual Salary = 126,000
His sales = 365,500
His men’s sales = 1,548,263
His commission = 5% of his sales
His override = ½% of his men’s sale
Find: Gross earnings of Yami
Solution:
Commission = 5% x his own sales
= 5% x 365,500 = 18,275
Override = ½% of his men’s sales
= 0.005 x 1,548,263 = 7,741.32

Basic salary = Annual salary/ 12

 Business Mathematics
= 126,000 / 12 = 10,500
Gross earnings = 18,275 + 7,741.32 + 10,500 = 36,516.32

Commission on Sales in Installment Basis

If the sales are on an installment basis, companies do not give commission based on sales. Rather,
they are given commission based on the collection, that is, payment made by buyers. Assuming a sale of
120,000 paid monthly installments of 10,000, the commission is based on the 10,000 payments made by the
buyer. Therefore, if the commission paid is, say, 3%, the monthly commission would be 3% x 10,000 = 300.

Learning Competencies:
 Illustrate the different types of commissions
 Compute commissions on a cash basis and commissions on an installment basis
 Solve problems involving interests and commissions
Activity 1:
Direction: Solve the given problems.
1. Langris works as a sales agent for the Golden Dawn and earns a basic monthly salary of 8,000 plus a
5% commission on all his sales. If he made total sales of 50,000 for the month, find his.
a. Commission
b. Gross Earnings
2. Julius works as a salesman for the Clover Kingdom. He is paid a basic salary of 8,500 per month plus
a 4% commission on all his sales. For the current month, he made total sales of 45,000. Find his:
a. Commission
b. Gross Earnings
Activity 2:
Directions: Solve the given problems with complete solutions. Write your answer on the yellow pad.
1. Noelle Silva is a sales representative. He is given a monthly salary of 10,000Php and a commission of
8% on his sales. If he sold a total of 128,000Php for December, find his gross earnings for the month.
2. Mimosa is a broker who earns a commission of 3% on all securities sales that he makes. For the past
year, he closed sales totaling 928,867. Find the amount of commission he earned for the year.
3. Luck is a sales engineer receiving basic monthly compensation of 13,500 and a commission on all
sales of 1%. Compute his gross earnings for the month if he sold 124,580.
4. Charmy is a sales manager receiving a monthly salary of 18,000, a commission of 5% on his sales, and
a monthly transportation allowance of 5,000. He is also given an override of 1% on his men’s sales. For
November, Charmy sold a total of 110,000. His men sold a total of 380,500. Compute his gross
earnings.
5. Luck is a straight commission salesman. He is given commission based on the following schedule:
Monthly Sales
Less than 50,000 …………………1%
50,000 – 99,999………………….. 2%
100,000 – 149,999………………. 3%
150,000 and above………………. 4%
Compute for his commission assuming his total sales is:
a. 75,800
b. 49,900
c. 151,200
d. 123,500

Prepared by:

Jerwin C. Laddaran