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COMMISSIONS AND OVERRIDES

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by

Kim Collado

on 11 October 2016

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Transcript of COMMISSIONS AND OVERRIDES

Override will apply to commissions given to marketing managers for the sales of people under them
Quotation 1
OVERRIDES
PLAIN COMMISSION
Example:
Most agents earn commissions only. They are not paid any salary. Therefore, they exert their best effort to increase their sales because the more they sell, the more they earn.
Computation of the commission makes use of the basic formula we learned, P = BR. The commission is the percentage (P), the sales is the base (B), and the commission rate is the rate (R).
Carmen Yambao is a sales agent for the High Ace Realty. She is paid based on commission only. She is given 2% commission on her sales. For the current month, her sales was P1 035 000.00. Her commission (which is also her gross earnings) would be:

$1.25
Wednesday, October 12, 2016
Vol XCIII, No. 311
What is commission?
Commission and Salary
A commission is a service charge assessed by a broker or investment advisor in return for providing investment advice and/or handling the purchase or sale of a security
Generally, If a person is employed by a firm as a salesman, he or she is given a basic salary in addition to the commission he or she is given on his or her sales. His or her gross earnings, therefore, are equal to:

Gross Earnings = Basic Salary + Commission
COMMISSIONS AND OVERRIDES
COMMISSIONS
Commission = P1 035 000 x 2%
= P20 700
Using our foregoing examples for commission only, and assuming that Carmen Yambao is an employee with basic salary, the gross earnings of Carmen would be as follow:
Carmen Yambao's gross earnings assuming a basic salary of P10 000. 00 per month:

Gross Earnings = Basic Salary + Commissions
= 10 000 + P1 035 000 x 2%
= 10 000 + P20 907
= P30 907
In certain cases, however, a sales employee that is given a basic salary earns commission on sales above a certain figure. For example, Eugene Tito is a sales representative earning a basic salary of P18 000. 00 a month plus 3% commission on his sales exceeding his quota of P15 000.00. Assume he made a total sales of P36 000.00 for the current month. Find his gross earnings.
Gem Bandivas is paid a basic salary of P9 400.00 a month plus commission on all sales above her quota of P30 000. 00 a month according to the following schedule.
Overrides

Example:
Mr. Coronilia is a product manager with five sales representatives under him. The company gives him an annual salary of P126 000.00; commission of 5% on his own sales; and an override of 1/2% on his men's sales. find his gross earnings for the month if his total sales is P365 500 with his men able to sell a total of P1 548 263 for the month.
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