Math CentralQuandaries & Queries


Question from LiSa:

I have a question about a few things if anyone can answer...
actual cost (AC) = $1000
selling price (SP) = $
amount earned for company (C) = 15% of... selling price?
commission 1 (C1) = 2.5%
commission 2 (C2) = 2.5%

How would you calculate how much the company's commission amount would be as well as the amounts for the other 2 that get 2.5%? And what would the selling price be? (the 15% $ + 2.5% $ + 2.5% $ ?)
Is the 2.5% taken from the original amount? I am soooo confused!

If anyone could help, that would be great!

Hi Lisa,

The first part of your question is straightforward. The amount the company earns is 15% of the selling price so the actual cost must be the remainder, 85% of the selling price. That is

85% of SP = AC = $1000 so
85/100 × SP = $1000
0.85 × SP = $1000
SP = $1000/0.85 = $1176.47

The commission is not so straightforward to me. You say each commission is 2.5% but you don't say 2.5% of what. If it is 2.5% of the selling price then find 2.5% of $1176.47 as C1 and the same amount as C2. This way some of the amount earned by the company is used to pay the commissions. I think this is probably the way you are expected to do this.

You could however add the commissions to the customer's costs. If this is the situation then since the two commissions total 5% the amount $1176.47 is 95% of what you will charge the customer. You can then use a calculation similar to what I did above to find the customer's cost and then the commissions.

I hope this is helpful rather than confusing,

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