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Commission

The document discusses how commissions are a common form of compensation for salespeople, paid as a percentage of sales. It provides examples of how to calculate gross earnings for various commission-based sales roles, including basic salary plus commissions on personal sales and overrides on other salespeople's sales. Additional allowances like transportation are sometimes included in gross earnings calculations. Formulas are given for computing commissions, overrides, and total gross earnings in different commission structures.

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felize padlla
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2K views11 pages

Commission

The document discusses how commissions are a common form of compensation for salespeople, paid as a percentage of sales. It provides examples of how to calculate gross earnings for various commission-based sales roles, including basic salary plus commissions on personal sales and overrides on other salespeople's sales. Additional allowances like transportation are sometimes included in gross earnings calculations. Formulas are given for computing commissions, overrides, and total gross earnings in different commission structures.

Uploaded by

felize padlla
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Commission is a form of

payment as remuneration for services


rendered or products sold
It is a common way to reward sales
people.
Sales agents and brokers are generally
paid commissions as incentives for
increasing the firms sales.
Some of these sales agents or brokers
are paid solely through commission or
what is termed as plain commission.

Plain commission is computed by


multiplying the total sales of an agent
or broker by the rate of the
commission.
Agents who are at the same time are
employees of the firm receive basic salary
plus the amount of the commission.

Assuming that Carmen Yambao receives a


basic salary of P 10,000 per month, her gross
earnings will be:
Gross Earnings = Basic Salary + Commission
= Basic Salary + (Sales x Rate of Commission)
= P10,000 + (P1,035,000x2%)
= P10,000 + P20,907
= P30,907
Some sales employees receive
commission on a per quota basis, that
is, they will only be awarded with
commission provided that they have
reached sales above a certain figure.
As their sales reached a certain range
above the minimum required figure,
the commission rate also increases.
Eugene Tito is a sales representative earning a basic salary
of 18,000 a month plus 3% commission on his sales
exceeding his quota of 15,000. Assume he made a total
sales of 36,000 for the current month. Find his gross
earnings.

Gross Earnings = Basic Salary + Commission


= 18,000 + 3% (Sales Quota)
= 18,000 + 3% (36,000 15,000)
= 18,000 + 3% (21,000)
= 18,000 + 630
= 18,630
Commission on sales in installment basis is
paid based on collection.
Marketing and/or product managers are
generally paid overrides on the sales of the
people under them.

The gross earnings will be their basic pay


plus commission on their own sales plus
override. In certain cases, they were also
given allowances.
M. Coronilia is a product manager with five sales representatives
under him. The company gives him an annual salary of
126,000; commission of 5% on his own sales; and an override
of 12% on his mens sales. Find his gross earnings for the month
if his total sales is 365,500 with his men able to sell a total of
1,548,263 for the month.

Commission = 5% his own sales


= 5% 365,500 = 18,275
1
Override = % his mens sales
2
= 0.005 1,548,263 = 7,741.32
126,000
Basic salary = = = 10,500
12 12
Gross earnings = 36,516.32
In certain cases, salespersons are also
given transportation and/or
representation allowance that is also
being added to the gross earnings of a
salesperson.
Emmanuel earns a basic salary of 12,500 per month. He earns
a 3% commission on his own sales and a 1% override on the
sales of his men. In addition, he is granted a transportation/
representation allowance of 1,000 per month. For the current
month, his men made a total sales of 250,000. He made a total
sales of 140,000. His gross earnings would be:

Gross earnings = Basic pay + Commission + Override +


Allowance
= 12,500 + (3%140,000) + (1%250,000) + 1,000
= 12,500 + 4,200 + 2,500 + 1,000
= 20,200

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