business mathematics week 11 using math in consumer credit and payroll mu123

Business Mathematics

Week 11

Using Math in Consumer Credit and Payroll

MU123

Learning Outcomes

- Consumer Credit1. Find the amount financed, the installment price, and the finance charge of an installment loan.2. Find the installment payment of an installment loan.

- Calculating Payroll 1. Find the gross pay per paycheck based on salary.

2. Find the gross pay per weekly paycheck

based on hourly wage.

3. Find the gross pay per paycheck

based on piecework wage.

4. Find the gross pay per paycheck based on commission.

Week 11

Consumer credit

– A type of credit or loan that is available to individuals or businesses—repaid in regular payments.

Installment loan

– A loan that is repaid in regular payments.

Closed-end credit

– A type of installment loan in which the amount borrowed and the interest is repaid in a specific number of equal payments.

Key Terms…Installment Loans and Closed-End Credit

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Open-end credit

– A type of installment loan in which there is no fixed amount borrowed or number of payments. Regular payments are made until the loan is paid off.

Finance charges or carrying charges

– The interest and any fee associated with an installment loan.


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Cash price

– Paid all at once at time of purchase.

Down payment

– Partial payment.

Amount financed

– Total amount paid in regular payments to payoff the balance.

Installment price

– Includes all installment payments, financecharges and down payment.


Installment Loans and Closed-End Credit

Find the amount financed, the installment price,and the finance charge of an installment loan

The 7th Inning purchased a mat cutter for the framing department on the installment plan with

a $60 down payment and 12 payments of $45.58.

Find the installment price of the mat cutter.

Installment Price (IP) = total of installment payments + down payment

IP = (12 x $45.58) + $60

IP = $546.96 + 60 = $606.96

Karen purchased a copier on the installment plan with a down payment of $50 and 6 monthly payments of $29.95. Find the installment price.

– $229.70

An Example…Installment Loans and Closed-End Credit

We can find the installment payment ifwe know the installment price, the downpayment and the number of payments.

Installment Loans and Closed-End Credit

Find the Installment Payment of an Installment Loan

STEP 2Divide the amount financed by the number ofinstallment payments.

Find the amount financed; subtract the down payment from the installment price.

STEP 1

The installment price of a pool table was $1,220 fora 12-month loan. If a $320 down payment was

made, find the installment payment.

Installment Price = $1,220

$1,220 - $320 = $900

$900 ÷ 12 = $75

The installment payment is $75.


Peggy bought a new dryer on an installment plan. She made a down payment of $100. The installment price for a five month loan was $412.50. What was the installment payment?

– $62.50


EXERCISE SET A

2. Calculating Payroll

Find the gross pay per paycheck based on salary.

Find the gross pay per weekly paycheck based on hourly wage.

Find the gross pay per paycheck based on piecework wage.

Find the gross pay per paycheck based on commission.

Key terms… Find the gross pay per paycheck based on salary.

Pay periods:

– Weekly: once a week or 52 times a year.

– Biweekly: every two weeks or 26 times a year.

– Semimonthly: twice a month or 24 times a year.

– Monthly: once a month or 12 times a year.

An Example… Find the gross pay per paycheck based on salary.

Nicole earns $36,000 a year andis paid on a weekly basis.

What is her gross pay per week?

Divide $36,000 by 52 pay periods.

$692.31

What if she is paid on a semimonthly basis?

$1,500.00

2. Calculating Payroll

Find the gross earnings for:

Carolyn, who earns $15,000 a year and is paid weekly.– $288.46

Martha, who earns $48,000 a year and is paid biweekly.– $1,846.15

Bill, who earns $35,000 a year and is paid semimonthly.– $1,458.33

Gross pay

Key terms…

Gross earnings (gross pay)

– The amount earned before deductions.

Net earnings (net pay/take-home pay)

– The amount of your paycheck.

Hourly rate or hourly wage

– The amount of pay per hour worked based on a standard 40 hour work week.

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Gross pay

Key terms..

Hourly rate or hourly wage

– The amount of pay per hour worked based on a standard 40 hour work week.

Overtime rate

– Rate of pay for hours worked that exceed 40hours per week.

Time and a half

– Standard overtime rate that is 1½ (or 1.5) timesan hourly rate. MORE

Find the gross pay per paycheck based on salary.

Key terms… Gross pay

Regular pay

– Earnings based on an hourly rate of pay.

Overtime pay

– Earnings based on overtime rate of pay.

Gross pay

STEP 2Find the overtime pay by multiplying the hourly rate by the overtime rate (usually 1.5) and then multiply that rate by the number of hours that exceed 40.

STEP 3Add the figures from Step 1 and Step 2.

Find the regular pay by multiplying the number of hours(40 or less) by the hourly wage.

STEP 1

Gross pay per week based on hourly wages

Gross pay

Theresa worked 45 hours last week. If her hourly rate is $10.50/hour, find her total gross earnings.

Multiply 40 x $10.50 = $420.00

To calculate the overtime amount, multiply her hourly rate by 1.5: $10.50 x 1.5 = $15.75

Multiply the overtime rate ($15.75) x the number of overtime hours (5): $15.75 x 5 = $78.75

Add the regular and overtime pay: $498.75

Gross pay per week based on hourly wages

Examples…

The regular hourly rate in the production department for these employees is$6.50, and overtime is paid at 1.5.

Find the weekly earnings for these employees:

Marcus, who worked 48 hours– $338

Allison, who worked 44 hours.– $299

Gross Pay

Examples… Gross Pay

Many employers motivate employees to produce more by paying according to the quantity ofacceptable

– Such piecework rates are typically offered in production or manufacturing jobs.

Key terms… Gross Pay

Piecework rate

– Amount of pay for each acceptable item produced.

Straight piecework rate

– Piecework rate where the pay per piece is thesame no matter how many items are produced.

Differential (escalating) piece rate

– Piecework rate that increases as more itemsare produced.

Examples… Gross Pay

Jorge assembles microchip boards.He is paid on a differential piecework basis.

If he assembles 317 boards how much will he earn?

Rates are as follows:

From 1-100 $1.32 per board


301 and over $1.58 per board

An Example…Gross Pay

Rates are as follows:



301 and over $1.58 per board

100 x $1.32 = $132.00

101 to 300 = 200 x $1.42 = $284.00

17 x $1.58 = $ 26.86

Total earnings: $442.86

Try this exampleJillian gets paid a differential piece rate foreach shirt she sews. Consult the chart

and calculate her weekly earningsif she sewed 352 shirts last week.

From 1-100: $0.47 each

From 101-300: $0.60 each301 and above: $0.70 each

What were her earnings?

$203.40

An Example…Gross Pay

Gross Pay

Gross pay per paycheckbased on commission

Many salespeople earn a commission, a percentage based on sales. Commission:

– Earnings based on sales. Straight commission

– Entire pay based on sales. Salary plus commission

– A set amount of pay plus an additional amount based on sales.

Gross Pay

Gross pay per paycheckbased on commission

Commission rate:

– Percent of sales that are eligible for a commission.

Quota

– A minimum amount of sales that is required before a commission is applicable.

Gross Pay

An Example…

Marisa is a restaurant supplies salesperson and receives 6% of her total sales as commission.Her sales totaled $12,000 during a given week.

Find her gross earnings.

Use the formula: P = R x B to find her earnings.

P = 0.06 x $12,000 = $720

Marisa’s earnings are $720

Gross Pay

An Example…

Melanie Brooks works for a cosmetics company and earns $200 a week in salary plus 30% commission on

all sales over $500. She had sales of $1,250 last week.

How much were her total earnings?

Her salary would be $200 plus any applicable commission.

The commission would be calculated at 30% on $750in sales or $225. Add this amount to her base salary.

The total is $425.

EXERCISE SET A

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EXERCISE SET A

Thank you

business mathematics week 11 using math in consumer credit and payroll mu123

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