section copyright © glencoe/mcgraw-hill mba, section 1- 6, slide 1 of 16 1-6 section objective...

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Copyright © Glencoe/McGraw-Hill MBA, Section 1- 6, Slide 1 of 16

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Section ObjectiveSection ObjectiveCalculate:

• straight commission

Determine:

• gross pay

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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.

Key Words to KnowKey Words to Know

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straight commission (p. 103)

Pay that consists only of money earned on commission.

Key Words to KnowKey Words to Know

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COMMISSIONCOMMISSIONYOU’RE PAID ON HOW MUCH YOU SELL. THIS COULD BE A GOOD YOU’RE PAID ON HOW MUCH YOU SELL. THIS COULD BE A GOOD OR BAD THING. WHY?OR BAD THING. WHY?GOOD – IF YOU ARE A GREAT SALESMAN AND CAN SELL CARS, GOOD – IF YOU ARE A GREAT SALESMAN AND CAN SELL CARS, FURNITURE, ETC. EASILY THEN YOU WILL MAKE MONEY – NO FURNITURE, ETC. EASILY THEN YOU WILL MAKE MONEY – NO WORRIES!!!! WORRIES!!!! BAD - IF YOU AREN’T SO GREAT AT BEING A SALESMAN THEN BAD - IF YOU AREN’T SO GREAT AT BEING A SALESMAN THEN BEING PAID ON STRAIGHT COMMISSION (ONLY BY WHAT YOU SELL BEING PAID ON STRAIGHT COMMISSION (ONLY BY WHAT YOU SELL – NO SMALL HOURLY RATE) THEN YOU WILL NOT COME OUT – NO SMALL HOURLY RATE) THEN YOU WILL NOT COME OUT AHEAD!!!AHEAD!!!

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Commission = Total Sales × Commission Rate

FormulaFormula

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Milton Arps sells real estate at a 7½ percent straight commission. Last week his sales totaled $290,000.

What was his commission?

Example 1Example 1

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Step: Find the commission.

Total Sales × Commission Rate

$290,000 × 7½%

$290,000 × 0.075 = $21,750

Example 1 AnswerExample 1 Answer

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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?

Example 2Example 2

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Find the commission.

Total Sales × Commission Rate

$3,614 × 7% = $252.98

Example 2 Answer: Example 2 Answer: Step 1Step 1

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Find the gross pay.

Salary or Commission

$250 or $252.98

Gross pay is $252.98 (the greater amount).

Example 2 Answer: Example 2 Answer: Step 2Step 2

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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?

Practice 1Practice 1

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$807.04

Practice 1 AnswerPractice 1 Answer

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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.

Practice 2Practice 2

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$428.40

Practice 2 AnswerPractice 2 Answer

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CLASSWORKCLASSWORKPAGE 104-105PAGE 104-105

#5 – 22B#5 – 22B

section copyright © glencoe/mcgraw-hill mba, section 1- 6, slide 1 of 16 1-6 section objective...

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