Lesson 1.7: Graduated Commission

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G _ _ D _ A T _ D    C _ _ M I _ _ I O N

Lesson 1.7: Graduated Commission

Pages 115-117

Objectives

Describe graduated commission.

Compute total graduated commission.

Evaluate the calculation of total sales for a week.

Question

What is a commission?Do you think that your commission rate will increase along with your sales?

Definitions

A graduated Commission offers a different rate of commission for each of several levels of sales.

What is graduated commission?

1. Rate of commission remains same
2. Commission rate decreases
3. Different rate of commission for each of several levels of sales
4. Commission rate based on income

How does the graduated commission help the employees to earn?

Create a relationship between commission rate and sales.

Formula for graduated commission

Total Graduated Commission= Sum of Commission for all levels of sales

Example

Irene Gomaz sells appliances at
Twin City Sales. She receives a graduated commission as shown.  Irene’s sales for the past month totaled $9,840. What was her  commission for the month?

                           Sales    X   Commission rate

First $1000: $1000      X         4%         =$40.00

Next $2000:$2000     X     6%              = $120.00

Over $3000:($9840 -$3000)X 8%    = 

                           $6840 X 8%  )                    =$547.20

            Total Graduated Commission = $707.20                     

Sal Espinosa makes a 10% commission on the first $5,000 of sales
and 15% on any sales over $5,000. Find his total graduated
commission on $15,000 in sales.

Points of importance when calculating the graduated commission.

1. Record the commission equally
2. Record change in commission rate according to change in sales
3. Record the sales
4. Record the decrease in commission

Example

Mike Turino is paid weekly and earns a 4% straight commission on sales of $5,000 or less and 5% on sales in excess of $5,000. One week Mike’s total graduated commission was $362. What were his total sales for that week?

Solution

Step 1: Let s = His total sales for the week.

Step 2: Write an equation for his total graduated commision.

Total Graduated
Commission = Commission on  first $5,000 +  Commission on sales  over $5,000

Step 3: Solve for s.

 $362 = (0.04 × $5,000) + [0.05(s – $5,000)]

 $362 = $200 + 0.05s – $250

 $362 = 0.05s – $50

 $412 = 0.05s

 $412/ 0.05s =0.05 /0.05s

$8,240 = S   Mike’s total sales for the week must have been $8,240 to have a total graduated

commission of $362

Dabney Washington is paid a weekly commission of 3.5% on sales of
$7,500 or less and 5.5% on sales in excess of $7,500. Last week
Dabney’s commission was $822.40. What was the total of her sales for
the week?

What is the difference between a graduated commission and commission?

Adnan Hassan earned 5% commission as a sales trainee. After
promotion to a sales associate, he earned 8% commission. His year-end
report showed $673,874 in total sales and $45,006.52 in commission.
What did his sales total as (a) a sales trainee and (b) a sales associate?

Give the important terms and concepts of the lesson

Thank you