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Gross Earnings: Commissions-Math with Business Applications, Payroll Unit - YouTube
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[6]
a commission
[7]
rate pays a salesperson either a
[10]
fixed percent of sales or a fixed amount
[13]
per item sold
[15]
commissions are designed to produce
[17]
maximum output
[18]
from the salesperson since pay is
[20]
directly dependent upon
[22]
sales here we have an example
[26]
of a straight commission where the
[28]
salesperson is paid a fixed percent of
[30]
sales
[32]
they're stating that the real estate
[33]
agent earns a 6.5
[36]
commission rate on all residential homes
[39]
sold and what that means
[40]
is they will earn 6.50
[45]
for every 100 sold and that
[48]
per 100 is because of the 6.5
[51]
percent which means per 100.
[54]
let's take a look at an example they're
[57]
asking us to compute the commission rate
[59]
for a real estate agent who just sold a
[61]
142
[63]
500 value home her commission rate is
[66]
5.25
[68]
to calculate gross earnings we will take
[71]
the commission rate
[73]
times the amount of sales
[76]
our base will be the home value
[80]
times the commission rate as a decimal
[83]
which will give us the part
[84]
or in this case the commission so this
[88]
real estate agent will receive seven
[90]
thousand four hundred eighty one dollars
[92]
twenty five cents for the sale of this
[94]
home
[98]
in this next example they're stating
[101]
that a
[101]
sporting goods store sales person had
[104]
sales of fourteen thousand five hundred
[105]
dollars one month
[107]
with returns and allowances of eight
[109]
hundred twenty five dollars
[111]
they're asking us to determine her gross
[113]
earnings if she's paid a 20
[116]
commission before the commission is
[118]
calculated
[119]
any returns from customers or any
[122]
allowances such as discounts
[124]
must be subtracted from the sales
[128]
so net sales would be the gross
[131]
sales less the returns and or discounts
[134]
of 825
[136]
for this problem means the actual sales
[139]
that this person is credited with
[141]
is thirteen thousand six hundred seventy
[143]
five dollars
[144]
now we're ready to calculate the gross
[147]
earnings or their commission
[149]
by taking the net sales times the
[151]
commission rate as a decimal
[154]
to find a gross earnings of two thousand
[157]
seven hundred thirty five dollars for
[159]
this month
[161]
the sliding scale or variable commission
[165]
is a method of pay designed to retain
[168]
top producing sales person
[170]
under such a plan a higher rated
[172]
commission is paid as
[174]
sales get larger and larger and here we
[177]
have an example
[179]
for the first twenty thousand dollars
[182]
worth of sales
[183]
they're at a pay rate of six percent
[185]
commission
[186]
the next ten thousand dollars in other
[189]
words
[190]
anything over twenty thousand up to
[191]
thirty thousand is at eight percent
[194]
and anything over thirty thousand
[197]
dollars
[197]
will be at a nine percent commission
[199]
rate so let's take a look at
[203]
what a commission earn on a sales of
[205]
thirty eight thousand
[206]
four hundred will be given this
[210]
variable commission rate and
[213]
we can use this sieve method
[216]
this is the total sales for this
[219]
individual
[220]
they met the quota of 20 000
[224]
the difference left over is eighteen
[226]
thousand four hundred
[229]
and that is the next
[232]
ten thousand twenty and thirty thousand
[235]
differ by ten so
[237]
ten thousand of this excess will be paid
[240]
at the eight percent commission rate
[242]
and the amount beyond thirty thousand
[247]
is the eight thousand four hundred
[249]
remember the total sales was
[251]
thirty eight thousand four hundred this
[253]
will be calculated at a 9
[255]
commission rate so taking each of these
[259]
sales at the different rates
[264]
gives us the following commission
[268]
adding the three commissions at the
[271]
variable commission rate or sliding
[274]
scale gives a gross earnings of two
[276]
thousand
[276]
seven hundred fifty six dollars
[280]
with a salary plus a commission the
[283]
salesperson is paid a fixed
[285]
sum per pay period plus a commission on
[288]
all sales
[290]
this method of payment is commonly used
[292]
by large
[293]
retail stores gross earnings with
[297]
salary plus commission are found
[300]
using the following formula so a fixed
[303]
amount per period
[304]
plus some commission amount and let's
[307]
take a look at an
[308]
example this sales person has paid a
[310]
salary of 290
[312]
a week for showing up for work plus
[315]
a four percent commission on all sales
[318]
over 750
[320]
the expectation or quota is that at this
[323]
salary of 290
[325]
dollars a week they would be responsible
[329]
for
[330]
750 worth of sales above that
[334]
is going to earn them the 4 commission
[337]
in this example compute this
[341]
employer's gross earnings for a week
[343]
whereas total sales were one thousand
[345]
eight hundred seventy dollars so we know
[350]
for the week the salary amount is 290
[354]
what we need to calculate though is the
[356]
commission
[357]
the commission of four percent is paid
[359]
on sales
[361]
over 750 so we need to subtract off
[364]
the quota amount to determine
[368]
the commission or the amount of sales
[371]
that the commission will be
[372]
paid on 1120 is beyond the
[376]
minimum expectation we'll multiply that
[379]
by four percent
[380]
to calculate the commission we now have
[384]
the salary of 290 plus the commission
[386]
for sales over 750
[389]
adds up to be a gross earnings of 334
[393]
dollars and 80 cents
[394]
for the sales person
[398]
let's look at another example of a
[401]
salary plus a commission
[407]
and here they're showing us fifteen
[409]
thousand dollars there's no commission
[411]
that would be where the salary
[414]
would be covering those types of sales
[416]
but
[417]
should the individual sell over fifteen
[419]
thousand up to twenty five it's a 9 10
[422]
percent commission and anything over 25
[424]
000 is a 1.1 percent
[429]
so here's those values and in this
[432]
example
[433]
we have someone selling 36 three hundred
[436]
dollars
[438]
their salary would be covering the
[440]
expectation of selling the fifteen
[442]
thousand
[443]
dollars worth of sales so there is no
[445]
commission rate for the first fifteen
[447]
thousand
[448]
but the excess of that earnings
[451]
is going to be paid at a commission rate
[454]
the first 10
[455]
000 and that 10 000 is coming from the
[458]
difference between
[459]
the minimum and the first commission
[462]
rate
[462]
incentive at 25 25 minus 15 is 10
[466]
000. we'll take 10 000 away from the 21
[471]
300 and that remaining balance will be
[474]
at this
[474]
highest commission rate of 1.1 percent
[479]
so no commission is mentioned at the 15
[482]
000 sales that would be
[485]
covered by the salaried amount
[488]
but the incentive of nine tenths of a
[491]
percent for
[492]
any sale between fifteen and twenty five
[495]
thousand dollars
[497]
garner's ninety dollars and the excess
[500]
beyond the twenty five thousand is
[503]
at a commission rate of one 1.1 percent
[506]
adding those together
[508]
the commission for this salesperson
[510]
beyond their salary whatever that amount
[512]
was
[513]
would be an added 214 dollars 30 cents
[516]
to their gross earnings
[520]
so here they're showing us the gross
[522]
earnings of
[523]
452 for the week and then
[526]
adding the commission on would give us
[528]
the gross earnings
[530]
of 666 dollars and 30 cents
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