1. How will you differentiate salary, wage, and commission?
2. How will you compute salary, wage, and commission?
Answer (1)
When discussing salary, wage, and commission, it is important to understand the differences between them as well as how each is calculated.
Salary :
Definition : A salary is a fixed regular payment, typically paid on a monthly or bi-weekly basis. It is often expressed as an annual sum.
How to Compute : Salaries are usually negotiated and stated annually, e.g., $50,000 per year. To find out the monthly salary, divide the annual salary by 12.
Monthly Salary = 12 Annual Salary For a bi-weekly paycheck, use:
Bi-Weekly Salary = 26 Annual Salary
Wage :
Definition : A wage is paid based on the number of hours worked and is often expressed as an hourly rate.
How to Compute : To calculate total earnings based on wages, multiply the hourly rate by the number of hours worked.
Total Earnings = Hourly Rate × Number of Hours Worked For instance, if someone earns $15 per hour and worked 40 hours in a week:
Weekly Earnings = 15 × 40 = 600
Commission :
Definition : Commission is typically a percentage of sales made, and it serves as an incentive for employees to increase sales.
How to Compute : To determine earnings from commission, multiply the total sales by the commission rate.
Commission Earnings = Sales Amount × Commission Rate For example, if sales amount to $10,000 and the commission rate is 5%:
Commission Earnings = 10 , 000 × 0.05 = 500
In summary, salary, wage, and commission represent different ways employees are compensated for their work in a business environment. Each has unique characteristics and computations, but all aim to ensure fair compensation for labor or services rendered.
