Module 8
1. Module 8
1.27. Page 4
Module 8: Daily Living
Bringing Ideas Together
In Get Started and Explore you examined occupations involving commissions and tips. Commissions and tips generally involve percents. Many salespeople receive a monthly salary and a percent commission on gross sales.
Work through the following examples.
Example 2
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Jaime is a salesperson at Boats and Motors. She receives a base salary of $1500.00/mo and a 2% commission on gross sales. Last month, her gross sales were $205 000.00. What was Jaime’s gross pay?
Solution
base monthly salary = $1500.00
gross sales = $205 000.00
commission rate = 2%
Jaime’s gross pay was $5600.00.
Example 3
Arnold Bossio is starting up a sports shop in northwestern Saskatchewan. He will soon be advertising for salespeople. Arnold has researched the market in his area and forecasts that each of his salespersons will have annual sales of $750 000.00. Arnold believes the annual gross pay of a salesperson should be $60 000.00. He intends to pay each salesperson a base salary of $2000.00/mo. At what rate should Arnold set commissions for the salespersons he hires? Round to one decimal place.
View the animated “Example 3 Solution: Setting a Commission Rate.”
Why Have Commissions?
Commissions serve as a motivator. Management generally believes that paying sales staff a commission on sales will encourage employees to work hard to achieve sales targets. However, commissions can also have a negative effect on staff and customer relations. Competition among staff for customers must be managed carefully to prevent hard feelings.
Self-Check
These questions may or may not involve a base salary. However, there is a single commission rate in each case.
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SC 4. Jenn is on the sales staff at a bridal shop. She receives a base wage of $8.80/h and 6% commission on all sales. Yesterday she worked 7.75 h and her sales were $2750.00. What was Jenn’s gross pay for yesterday?
SC 5. Paula is a real-estate broker. She has just sold a $150 000.00 condominium to a young couple. The commission was 7%.
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What was the total commission, in dollars, on the sale?
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The commission is divided between the listing agent (the broker who put the condo up for sale) and the agent who sells the property. The agent who sells the property receives 60% of the commission. What is Paula’s share of the commission?
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If 25% of what Paula receives goes to office expenses, how much will Paula have left?
SC 6. Gregory is a hairstylist. He is paid a wage of $12.00/h and receives a 20% commission on hair supplies. On Saturday, Gregory worked 7.50 h and sold $270.00 of hair supplies. Before tips, what were Gregory’s earnings?
Tips
To this point in this lesson, you have explored commissions. Employees in the service industry, such as servers, bellhops, housekeepers, taxi drivers, hairstylists, and barbers, often receive tips in the course of performing their duties.
In restaurants, servers are often rewarded for good service. Customers often determine tips as an approximate percent of their bill. Standard tips for good service are often in the 12%-to-15% range.
Tips seem like a good thing, but some employers factor in tips when they set a worker’s wage. So, often servers are paid little more than minimum wage on the assumption that customers’ tips will make up the difference.
Example 4
Debby is a waitress in a local restaurant. She has just served a family of four. The bill, before taxes, comes to $125.40. Her tip was approximately 12% of the total. Calculate her tip to the nearest dollar.
Solution
Self-Check
In the next set of questions you will problem solve based on your knowledge of tips.
SC 7. Lunay is a server at a family restaurant. She is paid the minimum wage of $8.80/h for a regular 8-h shift. On an average shift she serves customers whose bills total $900.00. She regularly receives 15% in tips.
- What would Lunay’s gross earnings be for one day?
- With tips, what does Lunay earn per hour?
SC 8. A party of three is at a restaurant, and their bill totals $87.00 before taxes. The GST (5%) is $4.35. How could you use the GST to calculate a tip of 15%?
Mastering Concepts
Nadia is a sales representative. Her monthly salary is $3000.00, and she receives a 4% commission on her gross sales. She would like to earn $70 000.00 this year. What would Nadia’s annual gross sales have to be?