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Mastering Commission and Gross Pay Calculations

Learn to calculate straight commission and determine gross pay based on sales. Understand important terms like commission rate and formula to effectively compute earnings. Practice examples to hone your skills.

raymondlwilliams
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Mastering Commission and Gross Pay Calculations

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  1. SECTION 1-6 pp. 103-105 Commission

  2. Section Objective Calculate: • straight commission Determine: • gross pay

  3. Key Words to Know commission (p. 103) An amount of money paid to an employee for selling a product or service. commission rate (p. 103) A specified amount of money paid to an employee for each sale made or a percent of the total value of sales made.

  4. Key Words to Know straight commission (p. 103) Pay that consists only of money earned on commission.

  5. Formula Commission = Total Sales ×Commission Rate

  6. The Road to Building Castles p. 103 What are the risks involved in working on commission?

  7. Example 1 Milton Arps sells real estate at a 7½percent straight commission. Last week his sales totaled $290,000. What was his commission?

  8. Example 1 Answer Step: Find the commission. Total Sales ×Commission Rate $290,000 ×7½% $290,000 ×0.075 = $21,750

  9. Example 2 Owen Theil is guaranteed a minimum salary of $250 a week, or 7 percent of his total sales, depending on whichever is greater. What was his gross pay for a week in which his total sales were $3,614?

  10. Example 2 Answer: Step 1 Find the commission. Total Sales ×Commission Rate $3,614 ×7% = $252.98

  11. Example 2 Answer: Step 2 Find the gross pay. Salary or Commission $250 or $252.98 Gross pay is $252.98 (the greater amount).

  12. Practice 1 Jermaine Dixon sells electronic equipment. He receives a straight commission of 6½ percent of his total sales. What commission will he receive in a week where his sales total $12,416?

  13. Practice 1 Answer $807.04

  14. Practice 2 Ryan O’Malley is paid either a commission or by the hour, whichever is greater. His hourly pay is $8.00 per hour with time and a half for all hours that exceed 40 hours per week. His commission is 7 percent of his sales. Find his gross pay in a week in which he worked 48 hours. His total sales for the week were $6,120.

  15. Practice 2 Answer $428.40

  16. END OF SECTION 1-6 Commission

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