Maharashtra Board Class 12 Maths Commerce Part II Chapter 1 Commission Brokerage and Discount PDF Download

Commission, Brokerage and Discount

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Commission, Brokerage

Discount

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1.1 Commission and Brokerage Agent

When transactions like sale, purchase, auction etc. are done through some middlemen, such middlemen are called agents.

The charges paid to an agent for doing the work on behalf of some other person, called principal, is called commission.

Principal: Principal refers to an individual party or parties participating in a transaction.

Commission: The charges paid to an agent for doing the work on behalf of principal is called commission. The commission or the remuneration paid to an agent is generally fixed as some percentage of the value of the transaction. For example, suppose an agent charges commission at 5% on the sales. Then in the transaction of Rs.15,000/-, the agent will get a commission of Rs.750 as follows.

\[Rs. 15000 \times \frac{5}{100} = Rs. 750\]

Following are different types of agents named according to their specialization.

Commission Agents: A commission agent is a person who buys or sells goods on behalf of his principal and gets commission for his service.

Broker: A broker is an agent who brings together the buyer and the seller for the purpose of purchase or sale. This commission is called brokerage and is charged to both the parties.

Auctioneer: An auctioneer is an agent who sells goods by auction. He sells goods to the highest bidder. Many a time name of the principal is not disclosed in the transaction.

Factor: A factor is an agent who is given the possession of goods and enters a contract for sale in his/her own name.

Del Credere Agent: A del credere agent gives guarantee to his principal that the party to whom he/she sells the goods will pay the sale price of goods. If a buyer is unable to pay after the transaction is completed, a del credere agent is liable for the payment.

Agent gets additional commission other than the usual commission for this. This is known as delcredere commission.

Teacher's Note

Commission is money that a middleman gets for helping buy or sell things. Like when your mother buys vegetables from a broker in the market, the broker gets some money for his help.

Exam Trick

Remember: Commission = Percentage of the amount. To find commission, multiply the total amount by the percentage and divide by 100.

Points to Remember

An agent is a middleman who helps in buying or selling.
Commission is the payment given to the agent.
Different types of agents are commission agents, brokers, auctioneers, factors, and del credere agents.
Commission is usually calculated as a percentage of the total sale amount.
Del credere agents give a guarantee that the buyer will pay.

Solved Examples

Ex.1: A merchant gives his agent 5% ordinary commission plus 2% del credere commission on sale of goods, worth Rs.55,000/-. How much does the agent receive? How much does the merchant receive?

Solution:

Agent's Commission at 5% = \(55000 \times \frac{5}{100} = Rs.2750\)

Rate of delcredere = 2%

Amount of delcredere = \(55000 \times \frac{2}{100} = Rs.1100\)

Agent's Total Commission = 2750 + 1100 = Rs.3850

Merchant receives = 55000 - 3850 = Rs.51150

Teacher's Note

When an agent sells goods, he gets commission. If he also guarantees payment, he gets extra commission. This is like a shopkeeper getting extra reward for taking extra responsibility.

Exam Trick

Remember: First calculate ordinary commission, then add del credere commission. The total commission is subtracted from the sale value to get what the merchant receives.

Points to Remember

Ordinary commission and del credere commission are both calculated separately.
Both commissions are added together.
The total commission is subtracted from the sale value.
The merchant receives the remaining amount after commission.
Del credere commission is extra payment for guarantee.

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