Question

Commission \[ = \]Amount of sales \[ \times \]_
A. Loss
B. Profit
C. Rate of Commission
D. Percentage

Answer 1

Hint: Here we use the knowledge of commission which is basically the money paid to the employee to sell a product. It is a motivation for the employee so they bring in more and more sales. We fill the blank given in the question by checking each option separately.

Complete step-by-step answer:
We know that commission is the amount that the employee gets on the basis of how many products he sold or how much sale he made. We define the terms given in the options and try to relate each term with commission.
A. Loss
Loss is the term used when a product is sold at lower price than it actually is. So, if we have cost price as CP and selling price is SP then the value of loss is CP minus SP.
If we multiply the amount of sales with the loss then we will not get the value of commission because commission is the extra money the employee gets so it cannot be related with loss.
So, option A is wrong.
B. Profit
Profit is the term used when a product is sold at higher price than it actually is. So, if we have cost price as CP and selling price is SP then the value of profit is SP minus CP.
If we multiply the amount of sales with the profit then we will not get the value of commission because commission is the extra money the employee gets but it is not necessary that there has to be a profit for the employee to get commission.
So, option B is wrong.
C. Rate of commission
Rate of commission is the percentage or the fixed amount associated with a certain amount of a product. So, the commission is directly dependent on the rate of commission. So the amount of sales multiplied with the rate of commission will give the total commission earned by an employee. Therefore, option C is correct.

So, the correct answer is “Option C”.

Note: Students can get confused when they associate the term commission with the term profit and they think the employee will get a commission only if there is a profit. Keep in mind the employee gets a commission even if there is a loss.