section 4.1: gross earnings. unit 4.1 vocabulary 1. base salary 2. commission 3. commission...
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Unit 4: PayrollSection 4.1: Gross Earnings
Unit 4.1 Vocabulary1. Base salary2. Commission3. Commission
employees4. Double Time5. Gross Pay6. Hourly employees7. Overtime8. Piece rate
9. Piecework employees
10.Quota11.Salaried
employees12.Salary plus
commission basis13.Straight
commission14.Time and a Half
Gross Pay (also called Gross Earnings)The amount of money an employee earns before taxes
and other deductions are taken out of his or her paycheck
Ewww! Gross!
Salaried EmployeesEmployees that earn an annual wage no matter how
many hours were spent working or how much output the employees produce.
Note: These employees are generally professionals. That means they have earned an advanced degree (college, university, or postsecondary institution) or have highly specialized skills. Examples?
Doctor
AccountantTeacherAthlete
Salaried Employees:Do not receive extra pay for late hours worked at the
office.Do not receive extra pay for working at home to
meet a deadline or prepare for a meeting.Do not receive extra pay for coming in on weekends
or holidays.But also do not lose salary if they miss a
reasonable number of days due to sickness or a family emergency.
Examples - SalariesFelipe is a salaried employee that earns an
annual income of $46,500.00 What is his monthly income?
Carmen is a pediatrician and earns an annual income of $117,600.00. What is her monthly income?
46,500 12 = $3,875
Note: Divide by 12 since there are 12 months in the year.
117,600 12 = $9,800
Hourly employeesEmployees that are paid a set rate per hour, and then
paid for the number of hours they work.
Working 40 hours per week (8 hours per day for 5 days) is considered Full-Time
If an employee works more than 40 hours per week, he or she will get paid more than their normal hourly rate.
Examples - HourlyLattimer gets paid $9.60 to work part time at
Applebees. He worked 18 hours last week. What were his gross earnings?
Frankie gets paid $8.75 per hour to work at Yankee Candle at the Outlet Mall. He worked 39 hours last week. What were Frankie’s gross earnings?
9.60 18 = $172.80Note: Multiply the number of hours worked by the rate per hour.
8.75 39 = $341.25
OvertimeWhen an employee works more than 40 hours per week.
Time and a halfFor each hour over the forty regular hours, the
employee will get paid 1½ times the regular rate of pay.
Multiply by: 1½
Examples – Time and a HalfLaura gets paid $15.25 per hour as a bank
teller at First Priority Bank. She worked 50 hours last week.How many overtime hours did she work?
What is her time-and-a-half rate of pay?
What is her gross pay?
50 – 40 = 10 overtime hours
15.25 1.5 = $22.88
40 15.25 = $610.0010 22.88 = $228.80
Total: $838.80
Examples – Time and a HalfFrancisco gets paid $13.50 per hour as a
manager at Beef’O’Brady’s. He worked 47 hours last week.How many overtime hours did he work?
What is his time-and-a-half rate of pay?
What is her gross pay?
47 – 40 = 7 overtime hours
13.50 1.5 = $20.25
40 13.50 = $540.007 20.25 = $141.75
Total: $681.75
Special Note:Many times, hourly workers will be paid for
at least ½ hour work. Meaning, if an employee works 6 hours and 13 minutes, he or she will get paid for 6½ hours or if an employee works for 9 hours 48 minutes, he or she will get paid for 10 hours.
So: Round up to the nearest half hour when calculating hours worked.
Double timeOn holidays, overnight trips, or other special occasions,
businesses will sometimes offer to pay employees twice the regular hourly rate.
Multiply by: 2
Piecework employeesEmployees that are paid by the amount of output they create. They receive a specified amount of money for
each unit produced.
The apparel industry typically operates this way. Individuals who can make clothes are paid a certain amount for each
article of clothing they create. The articles are called pieces.
Piece rateThe amount of money an employee earns for producing
each piece of output.
Examples - PieceworkBill works in piecework, creating widgets. He
gets paid $1.25 per widget. Last week he made the following number of widgets: Monday—45, Tuesday—50, Wednesday—48, Thurday—54, and Friday—46 How many widgets did he make last week?
What were Bill’s gross earnings?
45 + 50 + 48 + 54 + 46 = 243 widgets
243 1.25 = $303.75
Examples - PieceworkSandra works part-time cleaning houses. She
charges $15.00 per room she cleans. One week she cleaned the following number of rooms: Monday—3, Tuesday—4, Wednesday—5, Thurday—6, and Friday—7 How many rooms did she clean?
What were Sandra’s gross earnings?
3 + 4 + 5 + 6 + 7 = 25 rooms
25 15.00 = $375.00
Commission employeesEmployees that are paid a specified percent of the sales
they generate.
Examples:
Real Estate Agents
Car Salesmen
Court Attorneys
CommissionA percent of the dollar value of sales.
%%
%
Examples - CommissionRyan Duval is a real estate agent in Beverly
Hills. He makes 12% commission on his houses and he just sold a house for $895,000. What is his gross earnings?
$895,000 0.12 = $107,400
Examples - CommissionLeanne is a real estate agent who earns 15%
on each property she sells. One month she sold a condo worth $56,800, another condo worth $49,000, and a house worth $89,200. Find her gross earnings.
First, add the total value of the properties: 56,800 + 49,000 + 89,200 = 195,000
Next, calculate her commission: 195,000 0.15 = $29,250
Straight commissionA given dollar amount that an employee can earn for
each sale.
For instance, Jim from The Office earns $1,000 for every new account he opens at Dunder-Mifflin Paper Company.
Salary plus commission basisWhen a salesperson gets paid a salary along with a
commission on top of that.
- This means, an employee can make more money if they sell more products, but no matter what, they will at least get paid a certain amount.
Base salaryWhen an employee gets paid on a salary plus
commission basis, the amount they are guaranteed to be paid each week is called the _____________.
Note: The Base salary is usually not very high.
QuotaWhen an employee gets paid on a salary plus
commission basis, once they make sales past a certain point they begin to earn commission. The number of sales they have to make to begin making commission is called the ________________.
Examples - CommissionCarly Christianson sells large appliances at
Best Buy. She earns a salary of $150 per week plus 10% on her appliance sales over her quota of $2,000. Last week she sold $6,750 worth of appliances. Find Carly’s gross earnings for the week. First, find the amount of her sales above quota: 6,750 – 2,000 = $4,750Next, calculate her commission: 4,750 0.10 = $475Finally, add her commission to her base salary: $475 + $150 = $625