Forum: General / Homework Help

Homework Help
Need help with commissions and salaries
By Nicci_member has saluted, click to view salute photosPremium member Comments: 1667, member since Fri Mar 28, 2003
On Mon Oct 08, 2012 02:32 AM
Edited by Nicci_ (61209) on 2012-10-08 02:51:48 add more :/

Hey guys I have two questions I need help with:
"A salesperson is paid a salary of $700 per week. If expected yearly sales are $182,000, what rate of commission is this salary equivalent to?"

Of course the book has nothing remotely similar for me to use as a guide, and I'm horrible at maths, so pllease help me work it out!
I've tried a few different ways and got 1.44% and 5.7% ekk.

Second question is:
"You are offered a selling job with two salary package choices. The first is a retainer of $850 per month and a commission of 12% on sales over $5000. The second is commision only, at 14% on all sales.
a) If you expect to sell $15000 worth per month, which package would you choose?
b) At which sales level would it make no difference which salary package you chose?"
A is fine - I said Commision only, but I have no idea with B. I've followed the example and then I get stuck. What I have so far is:
0.14S = 850 +0.08 (S-5000)
= 850 + 0.08 S - 450

And I don't even know if thats right.

Thanks lovely ladies and gents x

5 Replies to Need help with commissions and salaries

re: Need help with commissions and salaries
By Mendelmember has saluted, click to view salute photos Comments: 1920, member since Wed Feb 23, 2005
On Mon Oct 08, 2012 01:16 PM
Can you show us the work you've done so far? What led to your answers of 1.44% and 5.7% in the first question? And how did you figure out the answer to question 2A?

It'll be more instructive to you if we can see your work and show you where (and if) it went wrong, rather than just doing the work out for you directly.
re: Need help with commissions and salaries
By colleeflower28 Comments: 236, member since Sat Feb 21, 2004
On Mon Oct 08, 2012 01:47 PM
Probably not the proper way to solve but for B the first thing I did was find out what the pay would be on salary only with $5000 sales ( the amount from A where you get no comission) and it came to $700 which is the answer in my opinion
re: Need help with commissions and salaries
By Nicci_member has saluted, click to view salute photosPremium member Comments: 1667, member since Fri Mar 28, 2003
On Tue Oct 09, 2012 08:42 AM
Alright, well I pretty much just followed the examples, and change the numbers to mine. When I was doing the examples, I worked backwards kinda. For some stupid reason this is part of my banking certificate, even though I don't ever do anything like this.

Anyway, for the first one:

$700 per week x 52 weeks in a year = $36400 retainer.
E = sales - retainer = $145600 commission
Commission = 2800 - 700 = 2100
R = 2100/(182000-145600) = 5.7%

$700 per week x 52 weeks in a year = $36400 retainer.
E = sales - retainer = $145600 commission
Commission = 2800 - 700 = 2100
R= 2100/(145600) = 1.44%

Then for the next one:
2A)
Earnings P1 = 850 + 0.12 (15000 – 5000) = $2050
Earnings P2 = 15000 x0.14 = $2100
= Package 2 is the better option.
re: Need help with commissions and salaries
By adageacemember has saluted, click to view salute photos Comments: 3982, member since Thu Sep 01, 2005
On Tue Oct 09, 2012 10:58 AM
For the first question, I think you may be getting confused about what's being asked.

Your calculations seem quite a bit more complicated than it needs to be.

The question is if you have a salary of X, what percentage of sales is this equal to? After all, commission is nothing more than being paid a percentage of sales. A commission does not HAVE to involve "sales over ____" or an additional retainer.

Just work out the salary per year and then work out what percentage rate of annual sales it comes to.
re: Need help with commissions and salaries
By Mendelmember has saluted, click to view salute photos Comments: 1920, member since Wed Feb 23, 2005
On Tue Oct 09, 2012 11:18 AM
I agree with adageace. After seeing your work, I was wondering whether "commission" and "retainer" meant something different in the US vs. UK (I assume that's where you're from?), but I think the question simply asks what percentage of sales is the salary equal to.

I think your answer for 2A is fine.

For 2B, I'm not sure where the 0.08 figure comes from, but generally the equations seem to be set up correctly.

ReplySendWatch