PRAYER

Prepared by: Loreta D. Neyney

 CLASSROOM RULES:

• Be on Time
• Check your internet connection (microphone and
headset-online class) and your learning environment
• One-mouth rule
 BUSINESS
MATHEMATICS

COMMISSIONS
AND
OVERRIDES
A. CONTENT STANDARDS

 The learners demonstrate an understanding of

key concepts of buying and selling.
B. PERFORMANCE STANDARDS

The learners are able to:

 analyze and solve problems on important
factors in managing a business: buying
products and selling products
C. LEARNING COMPETENCIES:

The learners are able to…

Differentiate commission from override;
Compute for commission earned on a particular cash sale;
Compute for commission earned on installment basis; and
Solve for gross earnings involving salary, commission, and
override. ABM_BM11BS-Ila-11-12.
DEFINITION OF TERMS

A commission is a fee paid to a person who makes a sale.

Commission rate is a specified amount of money paid to an
employee for each sale made or a percent of the total value of
sales made.
Commission = Total sales x Commission Rate
WHAT ARE SOME JOBS THAT PAY
COMMISSION?
Sales representative
Real-estate broker
Travel Agent
Insurance Agent
PLAIN COMMISSION

When sales agent earn commission only.

Commission = Total sales x Commission Rate
Percentage = Base x Rate
In Plain Commission (Straight Commission), the commission is the gross
earning.
EXAMPLE 1:

Lyn Tzi is a sales agent for the James Bright Realty. She is
paid based on commission only. She is given a 2 % commission
on her sales. For the current month, her sales was Php1, 035,
000.00. Her commission (which is also her gross earnings) would
be:
SOLUTION

Given: Commission = Total Sales x

Commission Rate = 2 % > 0.02 Commission Rate

Total Sales = Php1, 035, 000.00 C= TS x CR

Find: Commission?  = Php1, 035, 000.00 x 0.02

= Php20,700.00
EXAMPLE 2:

Bhen Ling is a car sales agent. He is paid commission only at the

rate of 2.5%. For the current month, he sold two cars totaling
Php1, 875, 000.00. His commission (gross earnings) would be:
SOLUTION

Given: Commission = Total Sales x Commission

Commission Rate = 2.5 % > 0.025 Rate
C= TS x CR
Total Sales = Php1, 875, 000.00
Find:  = Php1, 875, 000.00 x 0.025
Commission?
= Php46,875.00
COMMISSION AND SALARY

When a person receives his/her basic salary plus

the commission of his/her sales…
Gross Earnings = Basic Salary + Commission
EXAMPLE 1

Lyn Tzi’s gross earnings assuming a basic salary of Php10,000.00 per month:
Gross Earnings = Basic Salary + Commission
= Php10,000.00 + Php20,700.00
= Php30,700.00
EXAMPLE 2

Bhen Ling’s gross earnings assuming a basic salary of Php12,500.00 per month:
Gross Earnings = Basic Salary + Commission
= Php12,500.00 + Php46,875.00
= Php59,375.00
EXAMPLE 3

• Zion Konfu is a sales representative earning a basic salary of

Php18,000.00 plus 3% commission on his sales exceeding his quota of
Php15,000.00. Assume that he made a total sales of Php36,000.00 for the
current month. Find his gross earnings.
SOLUTION

• Given: Commission Rate=3% on his sales exceeding his quota of Php15,000.00 (Sales-Quota);
• Php 18,000 Basic Salary; Php 36,000.00 Total Sales
• Find: Gross Earnings ?
• Solution: Gross Earnings = Basic Salary + Commission
= Php18,000.00 + 3% (Sales-Quota)
= Php18,000.00 + 3% (Php36,000.00 – Php15,000.00)
= Php18,000.00 + 3% (Php21,000.00)
= Php18,000.00 + Php630.00
= Php18,630.00
EXAMPLE 4

• Lucao Koh is paid a basic salary of Php9,400.00 a month plus commission on all sales
above her quota of Php30,000.00 a month according to the following schedule:

• 1% on first Php20,000.00
• 2% on next Php20,000.00
• 3% on sales above quota exceeding the foregoing Php40,000.00
 COMPUTE FOR:
• Gross earnings if she sells a total of Php75,360.00 for the past month:
• Given: Basic Salary Php 9,400.00; Sales quota Php 30,000.00; Commission 1% on first
Php20,000.00; 2% on next Php20,000.00; 3% on sales above quota exceeding the foregoing
Php40,000.00; Total Sales Php75,360.00
Solution:
Total Sales Php75,360.00
Less: Sales Quota 30,000.00
Sales subject to commission 45,360.00
First (20,000.00 x 1%) 200.00
Next (20,000.00 x 2%) 400.00
Balance (5,360.00 x 3%) 160.80
Total Commission Php 760.80
Add: Basic Salary 9,400.00
Gross Earnings Php10,160.80
OVERRIDES

For people who have people under them doing the sales,
overrides are given by their companies in addition to their basic
salary.
Product managers and sales or marketing managers earn
overrides.
EXAMPLE 1

• John Lang is a product manager with five sales representatives

under him. The company gives him an annual salary of
Php126,000.00; 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 Php365,500.00 with his men able
to sell a total of Php1,548,263.00 for the month.
 SOLUTION

• Given: Annual Salary Php 126,000.00 Commission:

• Own Sales Php 365,500.00 = 5% x own sales
• Men’s Sales Php1,548,263.00 =5% x Php 365,500.00 Php 18,275.00
• Commission 5% on own sales Override:
• Override ½ % on men’s sales = ½ % x men’s sales
• Find: Gross Earnings ? = ½ % x Php 1,548,263.00 7,741.32
• Formula: Basic Salary:
• Gross Earnings = Basic Salary + = / 12 months
Commission + Overrides
=Php 126,000.00 /12 10,500.00
Gross Earnings Php 36,516.32
TRANSPORTATION ALLOWANCE AND
REPRESENTATION ALLOWANCE
• Previous Example:
• In addition, John lang is granted a transportation/representation allowance of Php
1,000.00 per month.
• Gross Earnings = Basic Salary + Commission + Override + Allowance
COMMISSION ON SALES IN INSTALLMENT BASIS

• Commissions are usually given on cash basis, that is, for CASH
SALES.
• Sales on installment basis has no commissions based on SALES
• Rather, commissions are given based on COLLECTION
(payment made by buyers).
EXAMPLE

• Assuming a sale of Php120,000.00 paid in monthly installments of Php10,000.00 with a

commission rate of 3%. Find the commission per month.
• Commission = Collection per month x Commission Rate
= Php 10,000.00 x 3%
= Php 300.00
REFERENCES:

•Lopez-Mariano, Norma D., PhD. (2016). Business Mathematics. First Edition. Mortgage, 166-168.
RBSI.
THANK YOU!