Unit 2 – L 3

Payroll
Gross and Net Pay

Payroll is a record of employees and their payment information.

Each employee on the payroll of a company receives a payslip that shows the Gross Pay, deductions,
and Net Pay.
Taxes
Deductions Pension
Insurance
Gross Pay
Net Pay Other Deductions
This is the amount that
the company offers an This is the amount the
employee. employee will receive.

Pay Period
The Pay Period denotes the frequency of the payments made. It determines how the annual salary is
divided.
Pay Period
Monthly Semi-Monthly Bi-Weekly Weekly
Once a month; Twice a month; Every two weeks; Every week;
per year per year per year per year

ex1 Lindsay works for a publishing company and has been made an offer of $42,000 per annum.
Calculate her gross pay for a pay period, if:
Annual salary
Pay for a Pay Period = = =
Number of periods in a year

a) the pay period is monthly: b) the pay period is semi-monthly:

Pay /mo = Pay semi-monthly =

c) the pay period is bi-weekly: d) the pay period is weekly:

Pay bi-weekly = Pay weekly =

ex2 Albert is paid $1200 weekly. Calculate his monthly payment.
To get the monthly gross payment, we CANNOT calculate: $1200 × 4

Why not?

Annual salary = OR
Monthly Payment
=
Monthly Payment =

Workweek Calculating the hourly rate of pay:

ex3 Julian is being paid $30,000 per annum at Oxford Editorials. He works 40 hours per week.
Calculate how much he makes every hour.
Hours worked in one year =

Hourly rate of pay =

Weekly Pay = OR

Hourly rate of pay =

Overtime Factor
Overtime Factor: used to calculate the overtime rate

50 worked hours
Suppose a regular
10 Overtime pay rate of $20/h,
40 Regular hours and overtime is paid
hours
at time-and-a-half
Regular Pay Overtime Pay Overtime Rate
= =

Overtime Factor
ex4 An employee works 40 hours in a week, including 10 hours overtime. His hourly rate of pay is $15,
and his overtime factor is 1.5. Calculate his total pay.

Regular pay = Regular hours × Pay rate

Overtime pay = Overtime hours × Pay rate x Overtime Factor

Total pay = Regular pay + Overtime pay

ex5 Dee Hall receives a yearly salary of $25,000.

a) If she is paid bi-weekly , what is her gross pay per pay period?

Pay for a pay period (bi-weekly) =

b) If her regular workweek is 37.5 hours, what is the equivalent hourly rate of pay?

Hourly rate of pay =

(ie. OR )

c) What is the gross pay for a pay period in which she works 90 hours, and overtime is at
time-and-a-half her regular pay?

Total pay = Regular pay + Overtime pay

Overtime hours

=
 Commissions
Commission is pay based on sales. It provides an incentive for better performance.
Types of Commission

Straight Graduated Basic Salary + Quota then

Commission Commission Commission Commission

Straight Commission
Employee is paid a percentage of sales for the period as salary.
Commission
Sales
Total Salary

Graduated Commission
Commission increases gradually as sales increase.
10% commission 20% commission 30% commission

Sales -
Commission

ex6 Janine is paid 3% sales commission for the first $10,000 sales she makes. She is then paid 4%
on the next $15,000 and 6% thereafter.

(i) Calculate her salary if her sales in January are $45,000.

Commission =

(ii) What single commission rate would represent her earnings in January, correct to 2 decimal
places?
Total Commission
Single Commission Rate =  100% =  100% 
Total Sales
Base Salary + Commission
Organization pays a fixed amount, called the base salary, and a commission on sales.

Percentage Commission

Sales Comm-
ission
Base Total Salary
Salary

Quota then Commission

Employee is required to sell a minimum amount before becoming eligible for commission.

ex7 Marco has a job where his commission is 6.5% on the first $10,000 above his monthly quota of
$15,000, and 8% on any additional sales thereafter.

(i) Calculate his salary if his sales in January are $38,000.

Commission =

(ii) What single commission rate would represent his earnings in January, correct to 2 decimal
places?
Total Commission
Single Commission Rate =  100% =  100% 
Total Sales

HOMEWORK:
1. Text Exercise3.3 pg 107 #1 to 23, 27 to 33 (odd #s)
2. Lab 4 #3 to 5