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Commission and Other Income


We all like earning money but did you know that people earn money in different ways? Some people earn salaries, some people (usually people in sales jobs like real estate agents) receive commissions and others receive wages.

So to help us understand these different types of earnings, let's start with a couple of definitions:

Income: money that is received or earned.

Wage: money paid by an employer to an employee. It is usually calculated as an hourly rate or based on the quantity of work done and can be paid weekly, fortnightly or monthly. 

Salary: A salary is a fixed annual income that is based on a fixed number of working hours. An employee may receive a weekly, fortnightly or monthly salary. The employee will receive the same amount of income each time period, regardless of whether they work more or less hours, as it is thought this will be averaged out.

Commission: an amount an agent or salesperson receives as a percentage of the amount that they sell. e.g. If Katherine receives a $10%$10% commission on a $\$150$$150 sale, she would earn $\$15$$15 since $\$15$$15 is $10%$10% of $\$150$$150.

Piecework: a person with a piecework wage earns money based on the number of items a person makes. e.g. A person receives $\$2$$2 for each item they make, so if they made $50$50 items, they would receive $\$100$$100 and if they made $100$100 items, they would receive $\$200$$200.

The way someone earns money will determine how we calculate how much they earn in a given time period. Read through the examples below to see some examples of commissions and other types of wages.


Question 1

Calculate the amount of commission a salesperson will receive if they earn $5%$5% on sales and the amount they sold was $\$7000$$7000.

Think: We need to find the percentage of the total amount sold.

Do: $5%\times7000=\$350$5%×7000=$350

The commission was $\$350$$350.


Question 2

A process worker earns $\$3$$3 for each article assembled. Calculate the number of articles he has to assemble to earn $\$240$$240.

Think: How can we express this as an equation if we let the number of articles assembled be $N$N?


$\$3\times N$$3×N $=$= $240$240
$N$N $=$= $240\div3$240÷​3
$N$N $=$= $80$80

He has to assemble $80$80 articles to make $\$240$$240.


Question 3

A retail assistant is employed on a casual basis from 2pm till 11pm from Monday to Friday, and from 6am till 10am on weekends. He is paid a casual rate of £15 per hour Monday to Friday, and £30 an hour on weekends.

  1. Calculate the amount of money he earns from working Monday to Friday.

  2. Calculate the income he earns on weekends.

  3. Calculate his weekly income.

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