DISCOUNT AND COMMISSION

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Discount is the amount taken off a regular price. If the price of goods is N100, and you are allowed to pay N80 for it, this means you have been given a discount of N20. From the illustration, we can deduce the following:

Original/Marked price/Cost price = N100

Cash discount = N20

Selling price = N80

You might have seen while buying goods that on every article there is a price marked. This price is known as the market price (M.P.) of the article. In order to clear the stocks or to increase sale, sometimes shopkeepers offer a certain percent of rebate on the marked price for cash payments. This is known as the discount. The customer or buyer pays the difference between the marked price and the discount. The amount deducted from the original marked prices is called ‘Retailer’s discount’ or simply ‘retail discount’ which is generally expressed as per cent or a fraction of the marked or original price.

Marked Price: The price printed on an article or on a tag tied to it or the advertised price or the listed price is called the marked price, or, M.P. of the article.

Net Price (Selling Price): The price of an article after deducting discount from the marked price is called the net price of the article.

NOTE: Discount is always calculated on the marked price.

In solving the problems on discount, the following formula are generally used:

3. If discount is , then,

KEYWORDS FOR DISCOUNT

• Reduce
• Off
• Remove
• Decrease

REASONS FOR DISCOUNT

• If a person buys large quantities of goods and pays immediately in cash, he or she may be given dis
• If the goods have been in the store for so long, the store owner might want to sell them off at a cheaper price.

Selling price = marked price – cash discount

 

 

EXAMPLES

4000. The marked price of a ceiling fan is N4000. The shopkeeper allows a discount of 6% on it. Find the selling price of the fan.

Solution

Cost price = N4000

Discount = 6% of N4000

=     

=

= N240

Selling price = marked price – cash discount

T= 4000 – 240

= N3760

37. A sweater originally cost $37.50. Last week Moesha bought it at 20% off. How much was deducted from the original price?

Solution

The question asked us to find the amount deducted from the original price which is just the cash discount

Original cost = $37.50

Discount = 20% of N37.50

=

=

= N 7.5

So, the amount to be deducted from the original price is N7.5

Example 1: The marked price of a pair of shoes is . The shopkeeper allows an off season discount of on it. Calculate – i) the discount and ii) the selling price.

Solution:  and

1. i)
2. ii)

Example 2: The marked price of an article is marked above the C.P. and then it is sold at a discount of . What is the net gain per cent?

Solution: Let the of the article be

more than the

 

Commission

Commission is an amount of money that an individual receives for an extra work done. Tip is a monetary gift given to an individual for a service well rended. Sales taxes are additional fees added to goods bought. It can be V.A.T which means value added tax. Commission is an amount of money paid to an employee or company as an incentive to sell more. A commission is generally a percentage of sales.  A commission may be paid in addition to a salary or in lieu of a salary. A commission is paid to the salesperson for his/her services by the seller with respect to the M.P. For example,

EXAMPLE

1. A salesman sold goods worth N3600 and received a commission of 5% for his work. How much was his commission in this transaction?

Solution

Value of goods = N3600

Commission = 5% of N3600

=

= 5  36

= N180

2. After eating breakfast at Applebee’s, the cost of the meal is $35. If you leave the waiter a 20% tip, find:
3. How much you left as tip
4. Total/gross cost of the meal.

 Solution

 Cost of the meal = $35

Tip  = 20% of $35

=

=

= $7

A tip of $7 was given to the waiter

Total/gross cost of the meal = Cost of the meal + tip

= $35 + $7

= $42

3. Suzzy just bought a new laptop. It was $459 plus 8% sales tax. How much was her total purchase?

Solution

Cost of the laptop = $459

Sales tax = 8% of $459

=

=

= $37.62

Total/gross cost of the laptop = Cost of the laptop + sales tax

= $459 + $37.62

= $496.62

 

Quiz

1. The marked price of a watch is N750. What is the selling price if a discount of 15% was given?
2. A man purchased some furniture worth $48600. He was given 8% discount. How much did he pay for the furniture?
3. A dealer was paid 5% commission on all the goods he sold. If he sold N5720 worth of goods. How much was his commission?
4. Terry wants to buy a wig, but he is unsure if he has enough money. The wig costs $300 and there is a 9% sales tax on it. If he has $325, does he have enough money?
5. A family meal costs $500. If they left the waiter 12% tip. Find the total amount they spent.

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