Commission / Gross Proceeds and Net Proceeds
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Business Mathematics Commission / Gross Proceeds and Net Proceeds by Dr. Vincent BE Sangalang y DB Samson
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Commission / Gross Proceeds and Net Proceeds
- 1. Commission / Gross Proceeds and Net Proceeds © Prof. Vincent Sangalang. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
- 2. Commission Commission or brokerage is the amount of money paid to an agent for performing a business service such as buying and selling goods, property or collection of money. Problems involving commission are percentage problems. Commission is the percentage in the sales collections which is called the base.
- 3. Formulas: Commission = Sales x Rate of Commission Rate of Commission = Commission/Sales Sales or Selling Price = Commission/Rate of Commission or C = Sales x R of C R of C = C/Sales Sales = C/R of C
- 4. Finding Commission Art Caras, a licensed real estate broker, sold a house and lot for P5,500,000 and was given a commission of 5%. How much did he earn? Solution: Commission = Sales x R of C = P5,500,000 x .05 = P 275,000
- 5. Finding the Rate of Commission Karen receives a monthly salary of P15,000 plus commission on all sales. Last month, her total earnings, salary plus commission were P27,000. If her total sales for the month were P240,000, what is the rate of her commission? Solution: C = Salary plus commission last month - Salary = P27,000 – P15,000 = P12,000 R of C = P12,000/P240,000 = .05 or 5%
- 6. Finding Sales Ada Madel earned P27,500 commission at a rate of 5% for selling a farm. What was the selling price of the farm? Solution: Sales = C/R of C = P27,500/.05 = P550,000
- 7. Types of Commission Straight Commission – the salesman's earnings based on commission alone. Formula: C = Sales x R of C EG: Amt. of Sales = P15,000 R of C = 10% or 0.1 Sol: C = Sales x R of C = P15,000 x 0.10 = P1,500.00
- 8. Types of Commission… Salary plus Commission – a salesman has a fixed salary aside from commission. Formula: Total Earnings = Salary + Commission EG: Monthly Salary = P18,000 R of C = 10% of sales or 0.10 Amt. of Sales = P15,000 Sol: Salary plus Commission = 18,000 + .10 x P15,000 = P18,000 + P1,500 = P19,500
- 9. Types of Commission… Salary plus Bonus – a salesman receives a monthly salary plus commission or bonus if he exceeds a certain sales quota. Formula: Excess Sales = Sales - Quota Total Earnings = Monthly Salary + Bonus EG: Salary = P25,000 R of C = 10% of bonus sales or exceeding P25,000 Amt. of Sales = P30,000 Sol: Salary plus Bonus = P25,000 + .10 (30,000 – 25,000) = P25,000 + P500 = P25,500
- 10. Types of Commission… Graduated Commission – One of the incentives given to sales representatives by companies in order to increase the volume of sales is the graduated commission scheme. As the sales volume increases, the rate of commission also increases.
- 11. EG: Scale of Commission: First P10,000 = 3% Next P10,000 = 4% Sales over P10,000 = 5% Amt. of Collection = P30,000 Solution: First P10,000 = P10,000 x .03 = P300 Next P10,000 = P10,000 x .04 = P400 Over P10,000 = P10,000 x .05 = P500 P1,200
- 12. Gross Proceeds and Net Proceeds Gross Proceeds or Selling Price is the money received by the agent for his employer. Net Proceeds is the gross proceeds minus the commission and other expenses. Formula: Net Proceeds = Gross Proceeds – (Commission + Expenses) EG: An automobile salesman sold a second hand car for P250,000. He received a commission of 3.5% for selling the car. What was the net proceeds of the principal?
- 13. Solution: Net Proceeds = Gross Proceeds – Commission = P250,000 – (P250,000 x .035) = P250,000 - P8750 = P241,250
- 14. Commission exercises Commission Rate of Commission Sales or Amt. Collected P1,670.90 P23,870 1½% P6,000 P3,000 3% P27,500 P550,000 2.5% P325,000
- 15. Gross Proceeds & Net Proceeds exercises 1. Mr. Capili sold 100 cavans of rice at P800 per cavan. He paid P600 for truck freight and P250 for storage. His commission rate is 7.5%. Find the gross proceeds and the net proceeds? 2. Find the gross proceeds and the net proceeds if the total sales were P25,070; agent’s commission was 5%; and miscellaneous expenses were P585.