Chapter 8 - Payroll Fundamentals I Comprehensive Questions (Frequently Most Tested) with Verified Answers

Chapter 8 - Payroll
Fundamentals I
Comprehensive Questions
(Frequently Most Tested) with
Verified Answers
Commissions - Answer: the dollar amount an employee earns based on the amount of goods or services,
the employee sells on behalf of the company. Subject to EI, CPP, federal and income taxes, QPP, QPIP
and Northwest territories and Nunavut sales taxes



How are commissions determined - Answer: Usually based on the employee contract or the collective
agreement



Three types of commission earnings - Answer: a straight percentage of sales, a fixed amount per sale,
multiple rates per target level



Straight percentage per sales - Answer: Commission earnings calculated using the straight percentage
method are based on a fixed percentage rate on gross or net sales. Commission = Sales X percentage
rate



Fixed amount per sale - Answer: Commission earnings calculated using the straight percentage method
are based on set dollar amount per each sale. Commission = fixed dollar amount X amount of product
sold.



Multiple rates per target level - Answer: Commission earnings calculated using the multiple rates per
target level method are similar to the straight percentage per sales method except the percentage rate
varies on the total amount of gross or net sales. Commission = zero to first target X first percentage rate
+ amount above the first rate up to second rate X second percentage rate + amount above the second
target X third percentage rate.



If an employee is only being paid a commission, they can be paid in two ways - Answer: draw/advance
against commission and straight commission