To solve a commission problem, which expression represents the calculation of the commission?

To solve a commission problem, which expression represents the calculation of the commission?

• A. sales price x rate of commission
• B. rate of commission + sales price
• C. sales price ÷ rate of commission
• D. rate of commission x market value

Answer: (A)

Commissions are earned as a percentage of the sale price, so the calculation uses multiplication: sale price multiplied by the commission rate. If the sale price is, say, $300,000 and the commission rate is 3% (0.03), the commission would be 300,000 × 0.03 = 9,000. This aligns with the idea that you’re taking a portion of the price as earnings. The other forms don’t fit because they don’t represent a monetary portion of the sale price. Adding the rate to the price mixes a percentage with currency and doesn’t give dollars earned. Dividing the price by the rate would yield a number that isn’t the earned commission. Multiplying the rate by market value only makes sense if market value equals the sale price, which isn’t guaranteed; the standard base is the sale price.

Commissions are earned as a percentage of the sale price, so the calculation uses multiplication: sale price multiplied by the commission rate.

If the sale price is, say, $300,000 and the commission rate is 3% (0.03), the commission would be 300,000 × 0.03 = 9,000. This aligns with the idea that you’re taking a portion of the price as earnings.

The other forms don’t fit because they don’t represent a monetary portion of the sale price. Adding the rate to the price mixes a percentage with currency and doesn’t give dollars earned. Dividing the price by the rate would yield a number that isn’t the earned commission. Multiplying the rate by market value only makes sense if market value equals the sale price, which isn’t guaranteed; the standard base is the sale price.