Commission and Other Income
We've already looked at commissions and other sources of income in earlier chapters. Now we are going to build on our knowledge and look at some more money terms.
Gross income: a person's income from all sources (e.g. wage, dividends and rental income) before any tax or deductions.
Net income: a person's income after tax and deductions.
Retainer: a wage earned for a predetermined amount of time or work. People who work on commission often receive a small retainer to ensure they receive a base amount for the hours that they work. e.g. Shirley receives a $\$1500$$1500 retainer per week plus a $5%$5% commission on all sales she makes. This means Shirley earns a fixed amount of $\$1500$$1500 per week plus a varying amount that is dependent on how much she sells.
Let's use these new terms to help us solve some more questions involved different types of income.
Examples
Question 1
If a commission of $20%$20% is paid on all sales, what is the total value of sales if the gross income is $\$238$$238?
Question 2
James is paid a monthly retainer of $\$800$$800 and a commission of $2%$2% of the value of the products he sells. Calculate his gross income if his sales for the month are $\$261000$$261000:
Question 3
Maria is paid a retainer of $\$240$$240 per week plus a commission based on her weekly sales. In one week she sells $\$9900$$9900 worth of goods. If her total pay for the week was $\$438$$438, what commission rate is Beth paid?
Let $x$x be her commission rate and give your answer as a percentage.
Think: How do we write an algebraic expression that describes how Maria's pay was calculated?
Do:
| $240+9900x$240+9900x | $=$= | $438$438 | (subtract $240$240 from both sides) |
| $9900x$9900x | $=$= | $198$198 | (divide both sides by $9900$9900) |
| $x$x | $=$= | $0.02$0.02 | |
| $x$x | $=$= | $2%$2% |
This means Maria is paid a $2%$2% commission rate.