Question

1. An agency billed $9 million in media and $1 million in production. The agency received a 13.5% commission on media and a 15% commission on production billing.

• What were the agency’s revenues from its media billing?
• What were the agency’s total revenues?
• What percentage comes from media?

2. The Net cost of a newspaper ad is $8,500. If your agency commission is 15%, find the gross cost of the ad?

Answer 1

(a) Revenues from media billing = Commission on media billing

Revenues from media billing = 13.5% * $9m = $1.215m

(b) Total revenue = Revenue from media billing + Revenue from production billing

Revenue from media billing = $1.215m (as calculated in previous step)

Revenue from production billing = Commission on production billing

Revenue from production billing = 15% * $1m = $0.15m

Total revenue = $1.215m + $0.15m = $1.365m

(c) Percentage from media = Revenue from media billing / Total revenue * 100

Total revenue = $1.365m (as calculate above in point (b)), Revenue from media billing = $1.215m (as calculated in point (a) above)

Putting these values in the above formula, we get,

Percentage from media = $1.215m / $1.365m * 100 = 89.01%

(d) Net cost = Gross cost - Commission

Given: Net cost = $8500, Commission = 15% of Gross cost

Putting these values in the above formula, we get,

$8500 = Gross cost - (15%* Gross cost)

$8500 = Gross cost * (1 - 15%)

$8500 = Gross cost * 85%

Gross cost = $8500 / 85% = $10000