BUSINESS

MATHEMATICS
QUARTER II:
COMMISSION AND
INTEREST
I. Business Applications
When you work for a salary, you receive
the same amount of money each week or
month. When you work for commission,
you are paid a percentage of the total
sales you complete.
Commission = Commission rate × Sales
Example 1: Joshua’s sales commission rate is
6%. What is the commission from the sale of
₱2,630,000 worth of new car sales?
Solution:
C = 6% × ₱2,630,000
C = ₱157,800.00
Therefore, the commission is ₱157,800.00.
Example 2. A salesperson gets a commission for his sales
based on the following scale: 6% on all sales 5% on all
sales between ₱50,000 and ₱100,000 4% on all sales over
₱100,000 If his total sales was ₱150,000, what is his gross
pay?
Solution: First commission = 6% (₱150,000)
= 0.06 (150,000) = ₱9,000
Second commission = 5% (₱100,000 – ₱50,000)
= 0.05 (50,000) = ₱2,500
Third commission = 4% (₱150,000 – ₱100,000)
= 0.04 (50,000) = ₱2,000.
Therefore, his total commission, which serves as his gross
pay, is ₱9,000 + ₱2,500 + ₱2,000 = ₱13,500.
Example 3. A real-estate agent receives a 3%
commission of ₱300,000 for selling a house.
What was the price of the house?
Solution: ₱300,000 represents 3% of the total
cost of the house; that is, 3%(house cost) =
₱300,000.
Therefore, the price of the house =
₱300,000/.03 = ₱10,000,000.
II. Simple Interest
In business, capital is very important. However, not all business
owners always have enough capital to sustain their business. More
often than not, they have to borrow money for use in the business.
It is in this context that interest plays an important role.
Borrowers need to pay interest on the money that they borrow.
  Interest is a fee paid for borrowing money or other assets. The
amount borrowed is called the principal. Rate (interest rate) is
the cost of using money expressed as a percentage of the principal
for a given period of time, which is usually per year. It is generally
regarded as the cost of borrowing or lending out money or the cost
of credit. Time is the term of period of the loan.
Two common types of interest are simple interest and compound
interest.
Simple Interest is computed on the principal
and then added to it.
Simple Interest Formula𝑰𝑺=𝑷𝒓𝒕
where𝐼𝑆= simple interest
P = principal, or the amount invested or borrowed

r = simple interest rate

t = term or time in years
Example 1: A bank offers 0.25% annual simple interest
rate for a particular deposit. How much interest will be
earned if 1 million pesos is deposited in this savings
account for 1 year?
Maturity (Future) Value𝑭=𝑷+𝑰𝒔
where F = maturity (future) value
P =principal
𝐼𝑠 =simple interest
 
Maturity (Future) Value𝑭=𝑷(𝟏+𝒓𝒕)
where F = maturity (future) value
P =principal
r = interest rate
t = term/ time in years
III. Ordinary Interest and Exact Interest
When time is expressed in days, interest could either be
ordinary interest or exact interest. For ordinary interest,
one year is taken as 360 days (approximate days in a
year); hence,

where D is the number of days or the time expressed in

days.
For exact interest, one year is taken as 365 days (exact
days in a year); hence,
Enrichment Activity 1: Let’s Solve!
1. An appliance center agent sold a set of kitchen utensils
for ₱20,000 and got a ₱600 commission. What was the
commission rate?
2. Miguel earns a commission of 10% which is ₱10,000.
How much did he sell?
3. A sales agent receives ₱12,000 a month corresponding to
a sales of ₱30,000 worth of goods. Furthermore, he receives
an additional 6% commission for all sales beyond his
monthly quota but not greater than ₱50,000. An additional
3% commission is for sales beyond ₱50,000. If his sales is
₱70,000 for the month, how much is his salary for the
month?
4. Marivic is a sales agent for the High Ace Realty. She is
paid based on commission only. She is given a 5%
commission on her sales. For the current month, her sales
were ₱1,035,000.00. How much would be her
commission?
 
5. A tutor at ABC Learning Center receives a monthly base
pay of ₱8,000 corresponding to a ₱5,000 tutorial fee input
to the Center. He gets a share of 15% of all tutorial fees
beyond the mandatory ₱15,000 input. If each student he
handles pays ₱6,000/month on tutorial fees and he has
five students for the month, how much share does he
receive beyond his base pay?
 Activity 1: Problem Solving!
1. Find the simple interest on a loan of ₱65,000 if the loan
is given at a rate of 20% and is due in 3 years.
2. Amparo invested a certain amount at 10% simple
interest per year. After 2 years, the interest she received
amounted to ₱3,000. How much did she invest?
3. Miko borrowed ₱25,000 at 10% annual simple interest
rate. How much should he pay after 3 years and 6
months?
4. How long will 1 million pesos earn a simple interest of
200,000 at 2% per annum?
5. How long will an amount of ₱50,000 gain a simple
interest of ₱10,000 at 4% per annum?
Lesson II: Salaries and Wages
Ways of Service Payment
I. Salary and Wage
Salary is the compensation usually quoted annually or
monthly for an employee. Wage, on the other hand, is
compensation quoted in an hourly or daily rate for an
employee. Salary earners usually get paid every 15 days
(bi-monthly) while wage earners usually get paid either
weekly or sometimes even monthly, at their employer's
convenience
Examples to emphasize the difference between salary
and wage.
Example 1: A tutor who is paid ₱200 per hour is earning a
wage. How much does he earn for a 10-hour week work?
(Solution: If he works for 10 hours a week, then he will be
paid ₱2,000 for that week.)

Example 2: A university assistant professor is usually

given a monthly salary. If his salary is ₱40,000 per month,
how much does he get every two weeks?
(Solution: If he gets ₱40,000 per month as his salary, then
he is paid ₱20,000 every two weeks.)
Example 3: A fast food service crew is paid per
hour. If he is paid an average wage of ₱77.43 per
hour, how much will he get if he works for 6 hours
and 6 days a week for 4 weeks?
(Solution: If he works for 6 hours a day and 6 days a
week for 4 weeks, then he earns a total of
₱11,149.92 for that month.)
NOTE
The daily or hourly wage of an employee can be
computed from his monthly salary.
Art. 103. Time of payment. Wages shall be paid at
least once every two (2) weeks or twice a month at
intervals not exceeding sixteen (16) days. If on
account of force majeure or circumstances beyond
the employer’s control, payment of wages on or
within the time herein provided cannot be made, the
employer shall pay the wages immediately after
such force majeure or circumstances have ceased.
No employer shall make payment with less
frequency than once a month.
II. Income and Benefits
Income is money that an individual receives in exchange for
providing a good/service or through investing capital.
Income is a broader term than wages and salary. Wages and
salaries are income to the persons receiving it. However, for
people who are not employees, their income may not be in the
form of wages or salaries. They can have commission income if
they are paid for the commission on sales they make, rental
income if they have properties they rent out, dividend income if
they are stockholders, royalties if they are authors, and other
income for whatever endeavor they engage in including profit-
making businesses. A business firm’s income is in the form of
profits that the business earns.
Some sources of income:
1. Farmers, fishermen and vendors earn income by
providing goods such as crops, fish and vegetables,
respectively.
2. Individuals may earn income by investing their
capital in stocks, mutual funds or bank deposits.
Example 1: Joviemel is a stockholder of the Wisdom
Corporation. For the current year, the corporation declared
10% cash dividend to stockholders. Joviemel owns 1, 000
shares of the company’s ₱10.00 par value shares. To
compute his dividend income, Joviemel’s dividend income =
No. of shares × Dividend rate = 1 000 shares × ₱10.00 par
value × 10% = ₱1,000.00
Example 2: Daniel Mon is an author and his book sold 2,
500 copies for the first semester. His book sells at ₱375 per
copy. He receives a 22% royalty from his publisher. His
royalty income would be:
Daniel Mon’s royalty = 2,500 × ₱375 × 22% = ₱206,250.00
Benefit is employee compensation given by
an employer on top of the basic salary/wage.
Note that benefits may come in the form of
cash or in kind.
Examples: 1. Cash Benefits: 13th month pay,
bonuses, rice subsidy, transportation
allowance
2. Non-cash benefits: SSS/GSIS, Pag-ibig,
PhilHealth
III. Gross Income
The gross income of an individual refers to the total
amount he/she earned before deductions are made. Other
adjustments may be payment for loans, etc.
Example 1. A teacher who gets a basic monthly salary of
₱20,000 and a living allowance of ₱2,000 per month has
an annual gross income of (20,000 x 12) + (2,000 x 12) =
₱264,000.
Example 2. A policeman who gets a basic salary of
₱25,000 per month, a living allowance of ₱2,500 per
month and a hazard pay of ₱12,000 per year has an
annual gross income of (25,000 x 12) + (2,500 x 12) +
12,000= ₱342,000.
IV. Net Income
The net income of an individual is the
difference between his/her gross income and
deductions. Example of deductions applicable
are income tax, SSS or GSIS contributions,
PhilHealth and Pag-ibig contributions. The
deductions can be a fixed amount or a
percentage of the basic salary.
Example 1. A teacher who gets a basic monthly
salary of ₱20,000 and a living allowance of ₱2,000
per month has an annual gross income of (20,000 x
12) + (2,000 x 12) = ₱264,000.
Suppose this teacher has to pay every year ₱22,500
for income tax, ₱4,500 for PhilHealth, PhP1,200 for
Pag-ibig and ₱6,975.60 for SSS contributions, then
his annual net income is 264,000 – (22,500 + 4,500
+ 1,200 + 6,975.60) = ₱228,824.40.
Example 2. A policeman who gets a basic salary of
₱25,000 per month, a living allowance of ₱2,500 per
month and a hazard pay of ₱12,000 per year has an
annual gross income of (25,000 × 12 ) + (2,500 ×
12) + 12,000= ₱342,000.
Suppose this policeman has to pay annually
₱25,000 for income tax, ₱4,500 for Philhealth,
₱1,200 for Pag-ibig and ₱27,000 for GSIS
contributions, then his net annual income is
342,000 – (25,000 + 4,500 + 1,200 +27,000) =
₱284,000.
Enrichment Activity 2: Problem Solving
1. A clerk earns a salary of ₱20,000 per month.
Assuming that he works 8 hours a day for a 20-day
work month, how much does he get per day? per hour?
2. An employee is paid a monthly salary of ₱16,000 for
working 20 days in a month. A taxi driver earns ₱750
per day. Assuming both work 8 hours a day, who has a
higher hourly wage?
3. Jenny is paid on per-piece basis at the rate of ₱2.20
per piece. If she finishes 210 pieces a week, how much
is her total earnings?
Activity 2. Problem Solving
1. A university professor who receives a basic
monthly salary of ₱80,000, a living allowance
of ₱2,000 per month, and has an investment of
₱500,000 which earns an interest of 6% per
year. Suppose this university professor has to
pay also each year ₱245,880 for income tax,
₱12,000 for Philhealth, ₱1,200 for Pag-ibig and
₱86,400 for GSIS contributions. What is his (a)
gross income (b) net income?
2. A minimum wage earner in Metro Manila is
paid ₱481 for an 8-hour workday. If he works
for 22 days in one month, what would be his
gross monthly income? Suppose the minimum
wage earner is exempted from paying income
tax. His deductions per month are ₱100 for
Pag-ibig, ₱200 for PhilHealth and ₱363.30 for
SSS then what is his net monthly income?