November 8, 2023

Instructions: Please read and study. Answer Activity 1, 2 & 3.

Show solutions as much as possible.
Review about simple and compound interest prepare for a quiz on Monday

Lesson 1: Commission

Activity 1 : Recruitments

Instruction: Analyze the given scenario and answer the question on your answer sheet.

Your cousin is recruiting you to join him in selling houses in their company. He said that one time he was
able to sell a house worth 1 million pesos. He received a commission of Php 50,000. Because of this, you
decided to join him in their company. In your first month you were able to sell a house worth 1.5 million
pesos. How much commission will you receive?

What Is It

Some companies pay their salespeople a straight salary, whereas others compensate their salespeople
through sales commission. Salary refers to a fixed regular payment, typically paid on a monthly or
biweekly basis but often expressed as an annual sum. While commission is the amount of money a
salesperson receives based on the level of his or her sales. This amount is based on an agreed
percentage of the revenue the salesperson has brought in through his or her sales. Some companies like
insurance companies pay commissions to their salespeople based on the latter’s gross profit rather than
on gross sales to make sure that these companies maintain the profitability of their products or services.
This is known as the straight commission.

The amount of percentage salespeople receive may vary from product to product and may depend on
the level of their sales. Payment of commissions is commonly practiced in real estate marketing.
Commissions are paid to motivate salespeople to sell more because the bigger the revenue through their
sales, the bigger the commission would be.

LESSON 1.1: TYPES OF COMMISSION

1. Straight commission is a compensation plan where the salesperson receives only a fixed percent based
on sales. No fixed salary is given. There is no limit to the total commission that a salesperson can earn.

Example 1: Liza, a beauty product agent, was able to sell beauty products worth Php48,000. Given that
her commission rate is 15%, how much is her commission if it is based on sales alone?

Solution:

𝐶𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛=𝑆𝑎𝑙𝑒𝑠 𝑥 𝐶𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛 𝑅𝑎𝑡𝑒

𝐶𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛=Php48,000 𝑥 0.15=Php7,200

Answer: Liza’s earning will be Php 7,200.

2. Salary plus commission is an alternative compensation plan where a salesperson receives a
commission aside from his or her fixed salary. This compensation plan offers security of receiving
something regardless of the level of sales a salesperson makes. However, companies who offer this
compensation plan usually have high expectations and quota that salespersons must meet.

Example 2: Based on example 1, if Liza receives a monthly salary of Php20,000 and 10% commission on
her total sales, how much will her total earnings be for the same amount of sales?

Solution:

𝑇𝑜𝑡𝑎𝑙 𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠=𝑀𝑜𝑛𝑡ℎ𝑙𝑦 𝑆𝑎𝑙𝑎𝑟𝑦+𝑆𝑎𝑙𝑒𝑠 𝐶𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛

𝑇𝑜𝑡𝑎𝑙 𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠=Php20,000+(Php48,000 x 0.10)

𝑇𝑜𝑡𝑎𝑙 𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠=Php20,000+Php4,800=Php24,800

Answer: Liza’s total earnings will be Php 24,800.

3. Salary plus bonus is a compensation plan where salespeople receive a bonus if they exceed their sales
quota. A sales quota is the amount set by the company a sales agent must achieve within a certain
period of time. This plan intends to keep salespeople motivated to do their best.

Example 3: Based on the previous examples, if Liza’s sales quota is Php25,000, how much will her
earnings be if she is given a bonus of 12% when she exceeds her sales quota?

Solution:

𝑇𝑜𝑡𝑎𝑙 𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠=𝑀𝑜𝑛𝑡ℎ𝑙𝑦 𝑆𝑎𝑙𝑎𝑟𝑦+𝐵𝑜𝑛𝑢𝑠

𝑇𝑜𝑡𝑎𝑙 𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠=Php20,000+[(Php48,000−Php25,000) x 0.12]

𝑇𝑜𝑡𝑎𝑙 𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠=Php20,000+Php2,760=Php22,760

Answer: Liza total earnings will be Php 22,760.

4. Graduated commission is a compensation plan where the rate of commission increases as the sales
volume increases.

Example 4: Liza is receiving no fixed salary but is being paid on a graduated commission scheme: 10% on
the first Php20,000, 15% on the second Php20,000, and 20% on all sales in excess of Php40,000. Based
on problem number 3, how much is her total earnings from her sales?

Solution:

𝐶𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛 𝑜𝑛 𝑡ℎ𝑒 𝑓𝑖𝑟𝑠𝑡 𝑃ℎ𝑝20,000 = 𝑃ℎ𝑝20,000 𝑥 0.10=Php2,000

𝐶𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛 𝑜𝑛 𝑡ℎ𝑒 𝑠𝑒𝑐𝑜𝑛𝑑 𝑃ℎ𝑝20,000 = 𝑃ℎ𝑝20,000 𝑥 0.15=Php3,000

𝐶𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛 𝑖𝑛 𝑒𝑥𝑐𝑒𝑠𝑠 𝑜𝑓 𝑃ℎ𝑝40,000 = 𝑃ℎ𝑝8,000 𝑥 0.20=Php1,600

𝑇𝑜𝑡𝑎𝑙 𝐶𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛= 𝑃ℎ𝑝2,000+Php3,000+Php1,600=Php6,600

Answer: Liza’s total earnings will be Php 6,600.

5. Override commission refers to the additional commission that sales managers or supervisors earn
from the sales of their sales representatives (subordinates).

Example 5: If Liza’s sales supervisor receives 1% override commission from the sales of his sales
representatives, how much is the override commission of the sales supervisor based on Liza’s sales
alone?

Solution:

𝑂𝑣𝑒𝑟𝑟𝑖𝑑𝑒 𝐶𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛=₱48 000 x 0.01=₱480

Answer: Liza’s sales supervisor will receive an override commission of Php480.

LESSON 1.2: COMPUTING COMMISSION ON CASH BASIS

Commission is computed on cash basis when a sale is completed. The commission is based on cash
received from the sale. Hence, it is a fee that a company pays to a salesperson in exchange for his or her
service in completing a sale. This type of commission is similar to computing straight commissions.

Example 6: Mercy works part-time as a real estate agent and earns a commission of 5% for the total sales
she makes. She was able to sell in cash three units of town houses worth Php1,409,640 (corner unit),
Php1,115,960 (end unit), and Php876,000 (inner unit). How much will her total commission be?

Solution:

𝑇𝑜𝑡𝑎𝑙 𝑆𝑎𝑙𝑒𝑠= Php1,409,640+Php1,115,960+Php876,000

𝑇𝑜𝑡𝑎𝑙 𝑆𝑎𝑙𝑒𝑠=Php3,401,600

𝐶𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛=𝑇𝑜𝑡𝑎𝑙 𝑆𝑎𝑙𝑒𝑠 𝑥 𝐶𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛 𝑅𝑎𝑡𝑒

𝐶𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛=Php3,401,600 x 0.05=Php170,080

Answer: Mercy will receive a total commission of Php170,080.

Example 7: For her birthday, Alyssa chose to have a new car instead of a debut party. Her father bought
her a new car worth Php648,000 in cash. The car dealer gave them a discount of Php35,000. How much
commission will the sales agent receive if he is given a commission rate of 3%?

Solution:

𝑁𝑒𝑡 𝑆𝑒𝑙𝑙𝑖𝑛𝑔 𝑃𝑟𝑖𝑐𝑒=𝑈𝑛𝑖𝑡 𝑃𝑟𝑖𝑐𝑒−𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡

𝑁𝑒𝑡 𝑆𝑒𝑙𝑙𝑖𝑛𝑔 𝑃𝑟𝑖𝑐𝑒=Php648,000−Php35,000=Php613,000

𝐶𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛=Php613,000 x 0.03=Php18,390

Answer: The sales agent will receive a commission of Php 18,390.

LESSON 1.3: COMPUTING COMMISSION ON INSTALLMENT BASIS

Commission is computed on installment basis when sales involve periodic payments rather than cash
payment. This computation of commission is commonly used by a company when the method of selling
involves installment transactions or credit terms. This is viewed as effective in involving salespeople in
collecting overdue accounts.

Example 8: While you were working at Rainbow Bookstore, you were able to sell 100 books worth Php
18,000 in total. The transaction is payable for 6 months equally divided into 6 equal installments without
interest. You will get 20% commission on the first month based from the monthly installments and for
every month thereafter the commission will decrease by 3%. How much will your total commission be?

Solution:

Monthly Installment= Php 18,000/6 = Php 3,000

First Month Commission
Php 3,000 x 0.20= Php 600
Second Month Commission
Php 3,000 x (0.20-0.03) = Php 3,000 x 0.17 = Php 510
Third Month Commission
Php 3,000 x (0.17-0.03) = Php 3,000 x 0.14 = Php 420
Fourth Month Commission
Php 3,000 x (0.14-0.03) = Php 3,000 x 0.11 = Php 330
Fifth Month Commission
Php 3,000 x (0.11-0.03) = Php 3,000 x 0.08 = Php 240
10
Sixth Month Commission
Php 3,000 x (0.08-0.03) = Php 3,000 x 0.05 = Php 150
Total Commission
Php 600 + Php 510 + Php 420 + Php 330 + Php 240 + Php 150 = Php 2,250
Answer: Your total commission for the sold 100 books will be Php 2,250

LESSON 1.4: DOWN PAYMENT, GROSS BALANCE AND CURRENT INCREASED BALANCE

• Down payment- the first payment that one makes when one buys something with an agreement to pay
the rest later.

• Book balance - is the remaining balance recorded under your account at a certain point in time. The
checks in transit and other bank charges are yet to be deducted on the book balance. Checks in transit
are checks written by the account owner which did not yet clear in the bank or are not yet cashed.

• Gross Balance is the amount that will be financed by a financing institution after down payment.

• Current increased balance- refers to the total amount you have to pay that includes interests or
penalties incurred by unpaid balance from a loan or payment you are supposed to have made but was
not able to do so on time.
Example 9: Winnie was online shopping when he saw a motor bicycle being sold for Php 50,000 payable
for 3 months with a Php 20,000 down payment. So he immediately checked his bank account and it says
he still have Php19,542.13 remaining balance or book balance. He knows that the bank gives 2% interest
per month in their debit cards, will he have enough money to pay for the down payment by next month?

Solution: 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐼𝑛𝑐𝑟𝑒𝑎𝑠𝑒𝑑 𝐵𝑎𝑙𝑎𝑛𝑐𝑒=𝐺𝑟𝑜𝑠𝑠 𝐵𝑎𝑙𝑎𝑛𝑐𝑒 (1+𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑅𝑎𝑡𝑒) 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐼𝑛𝑐𝑟𝑒𝑎𝑠𝑒𝑑

𝐵𝑎𝑙𝑎𝑛𝑐𝑒=𝑃ℎ𝑝 19,542.13 (1+0.02) 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐼𝑛𝑐𝑟𝑒𝑎𝑠𝑒𝑑 𝐵𝑎𝑙𝑎𝑛𝑐𝑒=𝑃ℎ𝑝 19,932.97

Answer: By next month, Winnie will have Php 19,932.97 gross balance in his debit card which is not
enough to pay the Php 20,000 down payment.

Example 10: Kyle, a sales agent, was able to sell a new car worth Php648,000 this week. He gave his
buyer a discount of Php35,000. His buyer paid a down payment that is 20% of the net price. The balance
will be paid through bank financing.

a. How much was the down payment?

Solution: 𝑁𝑒𝑡 𝑃𝑟𝑖𝑐𝑒=𝑈𝑛𝑖𝑡 𝑃𝑟𝑖𝑐𝑒−𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡 =Php648,000−Php35,000=Php613,000 𝐷𝑜𝑤𝑛

𝑃𝑎𝑦𝑚𝑒𝑛𝑡=𝑁𝑒𝑡 𝑃𝑟𝑖𝑐𝑒 𝑥 𝐷𝑜𝑤𝑛 𝑃𝑎𝑦𝑚𝑒𝑛𝑡 𝑅𝑎𝑡𝑒 =Php613,000 x 0.20=Php122,600

b. How much is the amount to be financed by the bank?

Solution: 𝐺𝑟𝑜𝑠𝑠 𝐵𝑎𝑙𝑎𝑛𝑐𝑒 (𝐴𝑚𝑜𝑢𝑛𝑡 𝑡𝑜 𝐵𝑒 𝐹𝑖𝑛𝑎𝑛𝑐𝑒𝑑 𝑡ℎ𝑟𝑜𝑢𝑔ℎ 𝐵𝑎𝑛𝑘) =𝑈𝑛𝑖𝑡 𝑃𝑟𝑖𝑐𝑒−𝐷𝑜𝑤𝑛 𝑃𝑎𝑦𝑚𝑒𝑛𝑡
=Php613,000−Php122,600=Php490,400

c. How much is the current increased balance if the bank charges an interest rate of 30.75%?

Solution: 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐼𝑛𝑐𝑟𝑒𝑎𝑠𝑒𝑑 𝐵𝑎𝑙𝑎𝑛𝑐𝑒=𝐺𝑟𝑜𝑠𝑠 𝐵𝑎𝑙𝑎𝑛𝑐𝑒 (1+𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑅𝑎𝑡𝑒) 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐼𝑛𝑐𝑟𝑒𝑎𝑠𝑒𝑑

𝐵𝑎𝑙𝑎𝑛𝑐𝑒=Php490,400 (1+0.3075)=Php641,198

d. How much total commission did Kyle receive if the car dealer pays a commission rate of 3% based on
the net price and the bank gave him 1% commission as sales incentive?

Solution:

• The commission given by the dealer will be based on the net price of the car sold

𝐶𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛 𝑓𝑟𝑜𝑚 𝑡ℎ𝑒 𝐷𝑒𝑎𝑙𝑒𝑟=𝑁𝑒𝑡 𝑃𝑟𝑖𝑐𝑒 𝑥 𝐶𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛 𝑅𝑎𝑡𝑒 𝐶𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛 𝑓𝑟𝑜𝑚 𝑡ℎ𝑒 𝐷𝑒𝑎𝑙𝑒𝑟=₱613
000 x 0.03=₱18 390

• While the commission given by the bank will be based on the amount to be financed by the bank after
the down payment was made

𝐶𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛 𝑓𝑟𝑜𝑚 𝑡ℎ𝑒 𝐵𝑎𝑛𝑘=𝐴𝑚𝑜𝑢𝑛𝑡 𝑡𝑜 𝐵𝑒 𝐹𝑖𝑛𝑎𝑛𝑐𝑒𝑑 𝑥 𝐶𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛 𝑅𝑎𝑡𝑒 𝐶𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛 𝑓𝑟𝑜𝑚 𝑡ℎ𝑒
𝐵𝑎𝑛𝑘=₱490 400 𝑥 0.01=₱4 904

• In computing for the total commission, we will add the commission from the dealer and commission
from the bank

𝑇𝑜𝑡𝑎𝑙 𝐶𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛=𝐶𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛 𝑓𝑟𝑜𝑚 𝑡ℎ𝑒 𝐷𝑒𝑎𝑙𝑒𝑟+𝐶𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛 𝑓𝑟𝑜𝑚 𝑡ℎ𝑒 𝐵𝑎𝑛𝑘 𝑇𝑜𝑡𝑎𝑙

𝐶𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛=₱18 390+₱4 904=₱23 294
Activity 3: Commissions on Installments
For the month of December, Foage has the highest sales among his colleagues. One of his best sale
was selling a Ferrari car worth Php 33 million payable for 2 years where the payment is equally
divided into each monthly installments without interest. If he will receive 10% commission for the
first month based from the monthly installments and for every month thereafter the commission
will decrease by 0.4%. How much will be his total commission for the first 3 months for this specific
transaction?