Unit 5 Notes: Commissions, Royalties, and Piecework Pay

Key Topics

• Commissions: Payment based on a percentage of sales made by an employee.
  • Example: If you sell items and receive a 20% commission, you earn 20% of the sales revenue.
• Royalties: Payment to authors/musicians, based on sales of their work.
  • Example: An author earning a 10% royalty on book sales.
• Piecework Pay: Payment per item produced by a worker.
  • Example: Earning a set amount for each item produced, like shoes or pencils.

Examples

1. Mr. Grove's Royalties

   • Scenario: Writes a textbook and earns 10% royalty on sales.
   • Calculation:
     • Cost per book: $47.95
     • Books sold: 17,000
     • Total Sales: $47.95 * 17,000 = $815,150
     • Royalty Payment: 10% of $815,150 = $81,515

2. Ellison's Cosmetics Commission

   • Scenario: Sells cosmetics door-to-door, earning commission on sales.
   • Commission Structure:
     • 11% of first $900
     • 17% of remaining sales
   • Calculation:
     • Total Sales: $1,250
     • Commission on $900: $900 * 11% = $99
     • Remaining Sales: $1,250 - $900 = $350
     • Commission on Remaining: $350 * 17% = $59.50
     • Total Commission: $99 + $59.50 = $158.50

3. Mr. Meyer’s Piecework Pay

   • Scenario: Assembles sneakers, paid per pair.
   • Calculation:
     • Rate per pair: $85
     • Pairs made: 3
     • Total Earnings: 3 * $85 = $255

4. Tony's Corn Picking

   • Scenario: Paid per container of corn picked.
   • Payment Structure:
     • $0.45 per container for first 200
     • $0.65 per container for containers over 200
   • Calculation:
     • Containers: 270
     • Pay for first 200: 200 * $0.45 = $90
     • Pay for additional 70: 70 * $0.65 = $45.50
     • Total Pay: $90 + $45.50 = $135.50

5. Jeff Bowers' Car Sales Commission

   • Scenario: Commission based on dealership's profit.
   • Commission Rates:
     • 20% if profit < $750
     • 22% if $750 ≤ profit ≤ $1,000
     • 25% if profit > $1,000
   • Commission Function (C(x)):
     • 0.20x when x ≤ 750
     • 0.22x when 750 < x ≤ 1,000
     • 0.25x when x > 1,000

6. Daniel's Furniture Sales

   • Scenario: Paid commission on furniture sales.
   • Commission Structure:
     • 10% of first $900
     • 15% of remaining sales
   • Given: Earned $750 in commission
   • Calculation to find total sales:
     • 0.1 * $900 + 0.15 * (Total Sales - $900) = $750
     • Solving gives Total Sales = $5,300

Conclusion

• Understanding payment structures like commissions, royalties, and piecework pay is crucial in various job scenarios.
• Practice these calculations to understand how earnings are computed in different contexts.