BA 1003

BUSINESS MATHEMATICS
LECTURE 12
PAYROLL AND SALARY

Prepa red by: Eve Ta n JK

Wage and Salary

Wage (hourly)
➢Amount of money paid for each hour the employee work
➢Standard 40 hours work

Salary (Agree-upon)
➢Amount of money paid not based on the number of hours

Gross earnings
𝐺𝑟𝑜𝑠𝑠 𝑒𝑎𝑟𝑛𝑖𝑛𝑔 = 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 ℎ𝑜𝑢𝑟𝑠 𝑤𝑜𝑟𝑘𝑒𝑑 × 𝑟𝑎𝑡𝑒 𝑝𝑒𝑟 ℎ𝑜𝑢𝑟

Prepa red by: Eve Ta n JK

Example:
The time card for Peggy and Amelia Are as in the following table.
Employee Mon Tue Wed Thu Fri Rate (per hour)
Peggy 2 4 8 6 3 RM 8.40
Amelia 3.5 3 7 6.75 7 RM 7.12

Find the gross earnings for Peggy and Amelia.

Solution:

Prepa red by: Eve Ta n JK

 Overtime Earnings

Overtime
➢Hours worked over 8 hours per day
➢Hours worked over 40 hours per week

Time and a half

➢Standard overtime rate that is 1.5 times the hourly rate.

Gross earnings
𝐺𝑟𝑜𝑠𝑠 𝑒𝑎𝑟𝑛𝑖𝑛𝑔 = 𝑟𝑒𝑔𝑢𝑙𝑎𝑟 𝑟𝑎𝑡𝑒 𝑒𝑎𝑟𝑛𝑖𝑛𝑔𝑠 + 𝑜𝑣𝑒𝑟𝑡𝑖𝑚𝑒 𝑟𝑎𝑡𝑒 𝑒𝑎𝑟𝑛𝑖𝑛𝑔𝑠

Prepa red by: Eve Ta n JK

Example:
Kimi is paid an hourly rate of RM 8.30 plus time and a half for any hours
worked over 8 hours per day. Find the gross pay (earning) for Kimi when
his time card shows the following.

Employee Mon Tue Wed Thu Fri Rate (per hour)

Kimi 9 8.25 8 9 4.5 RM 8.30

Solution:

Prepa red by: Eve Ta n JK

Example:
Frankie is paid an hourly rate of RM 9.50 plus time and a half for any hours
worked over 40 hours per day. Find the gross pay (earning) for Frankie
when his time card shows the following.

Employee Mon Tue Wed Thu Fri Rate (per hour)

Frankie 10 6.75 9 8 10.5 RM 9.50

Solution:

Prepa red by: Eve Ta n JK

Some Important Terms

Double time
➢Overtime rate that is 2 times the hourly rate.
➢Normally on holidays, Saturday and Sunday.

Shift differential
➢Compensating employees for working undesirable shifts
➢Swing shift (4pm to midnight)
➢Graveyard shift (midnight to 8am)

Split-shift premium
➢Compensating employees for working a full shift with an unusual long
break at some point during the shift.
➢4 hours work – 4 hours off – 4 hours work

Prepa red by: Eve Ta n JK

Compensatory time
➢Instead additional money, time off is given as compensation for
overtime hours
➢compensatory time = 1.5 × 𝑜𝑣𝑒𝑟𝑡𝑖𝑚𝑒 ℎ𝑜𝑢𝑟𝑠

Common pay period (salary)

➢Monthly = 12 paychecks each year
➢Semimonthly = twice each month; 24 paychecks each year
➢Biweekly = every 2 weeks; 26 paychecks each year
➢Weekly = 52 paychecks each year

Prepa red by: Eve Ta n JK

Example:
Chris is paid RM 936 a week as an executive assistant. If his normal
workweek is 40 hours, find his gross earning for a week in which he works
45 hours.

Solution:

Prepa red by: Eve Ta n JK

Commissions
➢Commission: Earnings based on sales.
➢Commission rate: Fixed percent of sales.

Example:
A real-estate broker charges a 6% commission. Find the commission on a
house selling for RM 168500.

Solution:
Example:
Janice is paid RM 225 per week by Beverly’s Creations, plus 3% on all sales
over RM 500. During a certain week, her total sales were RM 972. Find her
gross earning.

Solution:
Prepa red by: Eve Ta n JK