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| Example 1: |
The Stettnisch family's house was sold for $300,000. How
much money will they have after they pay their real estate agent a 5%
commission? |
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| Analysis: |
Commission is paid to an employee or company as an
incentive to sell more. A commission is generally a
percentage
of sales. The real estate agent was hired by the Stettnisch family to sell
their house for a 5% sales commission.
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| Solution: |
($300,000)*(0.05) = $15,000 and $300,000 -
$15,000 = $285,000
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| Answer: |
The Stettnisch family will have $285,000.00
after they pay their real estate agent.
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A commission may be paid in addition to a salary or in lieu of a salary.
However, in this lesson we will compute straight
commission only. Let's look at some more examples of straight commission.
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| Example 2: |
A stock broker receives a commission of 11% for selling
annuities to her clients. If she sells $50,000 in annuities, how much
commission will she earn? |
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| Solution: |
($50000)*(.11) = $5,500 |
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| Answer: |
The stock broker will earn $5,500.00. |
| Example 3: |
The Jones family purchases $350,000 in life insurance from
an insurance broker. How much will they pay the insurance broker if she
charges a 0.5% commission? |
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| Solution: |
($350000)*(0.005) = $1,750.
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| Answer: |
The Jones family will pay their insurance
broker a commission of $1,750.00. |
| Example 4: |
A car salesman earns a 3% commission on sales. If he sells
a car for $27,990, how much commission will he earn? |
 |
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| Solution: |
($27,990)*(0.03) = $839.70
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| Answer: |
The car salesman will earn a commission of $839.70. |
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In Examples 1 through 4, a commission can be earned or paid, depending on who
is the seller and who is the client. Other industries that use commissions as
sales incentives include: travel agents, retail employees, pharmaceutical sales
reps and computer sales reps.
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Summary: |
Commission is an amount of money paid to an employee or company
as an incentive to sell more. A straight commission is a percentage
of sales.
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Exercises
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Directions: Each problem below involves straight commission. Solve each
problem below by entering a dollar amount with cents. Do not enter a comma in
your answer. For each exercise below, click once in the ANSWER BOX, type in your
answer and then click ENTER. After you click ENTER, a message will appear in the
RESULTS BOX to indicate whether your answer is correct or incorrect. To start
over, click CLEAR.
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1.
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A computer salesman earns a 5.5% commission on each sale. If he
sells 5 computers in one week for a total of $15,500, how much
commission does he earn?
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2.
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The Chen family sold their house through a real estate agent for
$330,000. If the real estate agent gets a 4.5% commission, how much will
the Chen family have to pay her?
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3.
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A pharmaceutical sales rep receives an 3.5% commission for selling
medication to physicians. If he sells $22,500 of medication, then how
much commission will he earn?
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4.
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A department store pays an interior designer a 25% commission for
sales. How much will the department store have to pay the interior
designer if her weekly sales are $1,875?
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5.
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A wholesale food rep earns a 3.25% commission on sales. If her annual
sales is $35,000, how much commission will she earn?
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Interactive Math Goodies Software
