Lesson 1: Income - Calculating Commission

   Constructing Knowledge

Calculating pay involving commission requires careful consideration:

  • Are there varying commission rates?
  • Is there a base pay (usually an hourly wage or salary)?

If there is a base pay, add the base pay to any commission earned.

Commission is calculated by multiplying the eligible sales by the commission rate.

   Multimedia

A video describing calculating pay when commission is part of the pay structure is provided.


EXAMPLE 1

Gordon is a talent agent who books actors and actresses for commercials. Recently, Gordon booked an internet commercial for an actor which is supposed to air online for at least one year. The fee collected by the actor was $2 072.00. Gordon earns 15% commission on all bookings. How much money did Gordon collect from booking the actor?

Solution


Gordon collected 15% of $2 072.00.

Note: Percent means per 100. To use a percentage in a calculation, you must change the percentage to a decimal number by dividing it by 100.

commission = $2 072.00 × 15%
= $2 072.00 × 0.15
= $310.80

Gordon will need to collect $310.80 as his fee.

EXAMPLE 2

Therese is a sales associate for a cell phone company. She is paid $12.00/hour and 8% commission on all cell phones and accessories she sells. If she worked 30 hours last week, and sold $5 500 worth of cell phones and accessories, what was her gross pay?

Solution


Step 1: Calculate the commission

commission = sales × commission rate
= $5 500 × 8%
= $5 500 × 0.08
= $440.00

Step 2: Calculate the base pay

base pay = rate of pay × hours worked
= $12.00/hour × 30 hours
= $360.00

Step 3: Calculate the total pay

gross pay = $360.00 + $440.00
= $800.00

Therese's gross pay last week was $800.00.


Now, it is your turn! Complete the questions in your Chapter 1, Lesson 1 Practice Makes Perfect that refer to Commission.



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