Manager Commission

This query is : Resolved

Pritam Singh (Querist)
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15 June 2011 Please tell me the procedure to calculate Manager's Commission

Manager Commission is 5% on NPAT
Rate of Tax 30%
Margin 20% on Cost
Calculate Manager commission after including Commission in cost

BALAJI R

BALAJI R (Expert)
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20 June 2011 Let C be the cost excluding manager's commission and MC be the manager's commission.

Then,
Profit Before Tax will be 0.2(C+MC)
Profit After Tax will be 0.14(C+MC).That is 70% of PBT(Since Tax rate is 30%).

Manager's Commission will be
0.007(C+MC).That is 5% of NPAT

MC=0.007(C+MC)
MC-.007MC=.007C
0.993MC=0.007C
MC=0.007C/0.993.
If you have any one parameter,cost or profit, Manager's commission can be found out by using the above relations.