Ray's New Higher Arithmetic · Arts. 260–263 · Unit 16: Percentage: Applications without Time (continued)

70. Commission and brokerage: words, Cases I and II

Goal: Your student explains what an agent, consignment, commission and brokerage are, and finds a commission or a rate of commission.

⏱ About 40 minutes · 7 steps

Open it at the Internet Archive ↗

You'll need

  • The book
  • A slate, small whiteboard or scrap paper
  • A notebook and pencil

What's in the book

Section IV, Commission and Brokerage: definitions (commission-merchant, principal, commission, consignment, consignor and consignee, net proceeds, guaranty, broker, brokerage), the four cases, then Case I and Case II with examples. Answers are printed.

The lesson, step by step

  1. Warm-up

    Ask: If a friend sells your old bike for you and keeps $5 of the sale, what is that $5 for? (Their pay for doing the selling.)

  2. The idea

    Read together:

    A Commission-Merchant, Agent, or Factor is a person who sells property, makes investments, collects debts, or transacts other business for another.

    Commission is the percentage paid to the commission-merchant for doing the business.

    A Consignment is a quantity of merchandise sent to a commission merchant to be sold.

    The Net Proceeds is the sum left after all charges have been paid.

    A Broker is a person who deals in money, bills of credit, stocks, or real estate, etc.

  3. How business ran

    In the 1880s a farmer or factory far from a big city shipped goods to an agent in Cincinnati, New York or New Orleans. The agent sold them, took a commission, paid freight and storage, and sent back the net proceeds. The examples (flour, pork, sugar in hogsheads, "hhd.") come from that trade.

  4. Work the book's example

    Case I: amount of sale or purchase × rate = commission.

    I collect for A $268.40, and have 5% commission: what does A get?

    Commission = $268.40 × .05 = $13.42. A gets $268.40 − $13.42 = $254.98.

  5. Guided practice

    Together:

    A lawyer charged 8% for collecting a note of $648.75: what are his fee and the net proceeds?

    Then Case II (rate = commission ÷ amount of sale):

    Charged $52.50 for collecting a debt of $1050: what was my rate of commission?

  6. Independent practice

    Your student works several examples from each case. For Case I, the commission is figured on the sale or purchase, not on the net proceeds.

  7. Check and wrap-up

    Check the printed answers. Ask: Who is the principal, and who is the consignee? (The owner of the goods; the agent who receives them.)

Afterwards

Finish the Case I and Case II examples over two days if needed.

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